16
Aug

Deciphering Dodd-Frank

Posted by: AmberRoberts in: Financial Services -

Last week Baruch College in New York City hosted a panel of leaders from NASDAQ, NYSE and NIRI (National Investor Relations Institute) for a discussion aimed at investor relations officers and how they should begin preparing for implementation of the Dodd-Frank Act — arguably the most significant piece of financial legislation to be passed since the great depression.

The 60 minute format only allowed for 23 pages of the 2300+ word document to be covered. The discussion focused on section 951 on Governance and Disclosure.

Highlights:

• Say-on-pay.  At least once every three years (could be as frequent as every year) shareholders will be asked to approve the executive compensation included in the proxy.  This basically makes it much easier for shareholders to show dissent on executive pay.  Effective in 2011.

• Golden parachute.  Any executive compensation payable based on a transaction (proposed acquisition, merger, consolidation or sale of the company) is subject to a vote in context of that transaction (exception being if it is already subject to annual say-on-pay vote).  In other words, shareholders must separately approve this executive pay package. This will be effective six months after the legislation is enacted.

Macro question: Would a change in control of Congress this November alter any of this?

The majority don’t think so. Even if Republicans take control of the House in November that would likely not significantly impact the bill and its implementation. While there could be technical corrections, and there are already some of those in progress, it would be difficult to make significant changes to Dodd-Frank.

The video recording of the event is available here.

I hope for this to be a series of blog posts as we continue to make sense of the 500+ rules stemming from this bill.

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