It has been a while since the SEC moved forward with any rulemaking under the Dodd-Frank Act. In fact, the last action taken by the SEC was in December 2013 when it approved amendments to Nasdaq listing rules relating to compensation committee independence. Nothing has happened since then. The SEC’s previous rulemaking schedule indicated some action would be taken by the end of October 2014. Even if this timing holds true, it is unlikely any new rule will impact the 2015 proxy season. Nonetheless, before any new rulemaking happens, we thought it made sense to remind everyone where we currently are with Dodd-Frank and what we can expect.
As you will recall, the Dodd-Frank Act included 7 significant provisions relating to public company corporate governance matters. Below is a status report on each of these 7 items:
The SEC adopted final rules relating to:
- Advisory votes of shareholders about executive compensation and golden parachutes (the so-called “say-on-pay” votes) (§951).
- Compensation committee independence (§952) (and has approved listing rules relating to compensation committee independence adopted by the New York Stock Exchange and NASDAQ).
The NYSE and NASDAQ adopted (and the SEC approved) listing rules prohibiting brokers from voting uninstructed shares on certain matters, including proposals related to executive compensation (§957).
The SEC proposed (but has not yet finalized) rules that will require disclosure of the ratio between the CEO’s total compensation and the median total compensation for all other company employees (§953(b)).
Rules Not Yet Proposed
The SEC has not yet proposed rules with regard to the following:
- “Pay versus performance” disclosure (§953(a)).
- Disclosure of incentive-based compensation and mandatory clawback policies (§954).
- Disclosure regarding employee and director hedging (§955).
We will continue to monitor any SEC rulemaking and will provide updates as material developments occur.