U.S. Senator Christopher Dodd today introduced a long-awaited financial regulatory reform bill that includes a variety of significant corporate governance provisions, including proxy access, "say on pay," and majority voting.
Dodd, Senator Charles Schumer, and seven other Senate Democrats introduced the 1,136-page bill, which also would create a single bank regulator, provide for self-funding the SEC, and establish a new consumer financial protection agency.
"It is the job of this Congress to restore responsibility and accountability in our financial system to give Americans confidence that there is a system in place that works for and protects them," Dodd said at a press conference. "We must create a sound foundation to grow the economy and create jobs."
The bill would require public companies to hold advisory votes on compensation at shareholder meetings held more than one year after the law is enacted, which means that the first mandatory votes most likely would not occur until 2011. The bill also directs the SEC to issue rules within a year of the enactment date.
The bill directs the SEC to issue a rule on proxy access within 180 days, but does not set minimum standards. The bill directs the SEC to work with the stock exchanges to require majority voting provisions as a listing requirement, but authorizes the SEC to exempt certain firms. Under the bill, companies would have to obtain investor consent to have staggered board terms; firms with existing classified boards would be required to seek approval at their next annual meeting. Issuers also would be required to adopt "claw back" policies. Companies also would have to provide disclosure on their selection of their board leadership structures.