I was recently asked to write up a brief summary of the corporate governance provisions of the Dodd-Frank Act. The result has now been posted to SSRN. It's not a think piece, but folks looking for a quick overview of the Act's requirements and a concise critique thereof may find it useful:
Abstract: This essay provides a brief overview of the seven principal corporate governance provisions of The Wall Street Reform and Consumer Protection Act of 2010 (better known as “The Dodd-Frank Act”).
1. Section 951 creates a so-called “say on pay” mandate, requiring periodic shareholder advisory votes on executive compensation.
2. Section 952 mandates that the compensation committees of reporting companies must be fully independent and that those committees be given certain specified oversight responsibilities.
3. Section 953 directs that the SEC require companies to provide additional disclosures with respect to executive compensation.
4. Section 954 expands Sarbanes-Oxley Act’s rules regarding clawbacks of executive compensation.
5. Section 971 affirms that the SEC has authority to promulgate a so-called “proxy access” rule pursuant to which shareholders would be allowed to use the company’s proxy statement to nominate candidates to the board of directors.
6. Section 972 requires that companies disclose whether the same person holds both the CEO and Chairman of the Board positions and why they either do or do not do so.
7. Section 989G affords small issuers an exemption from the internal controls auditor attestation requirement of Section 404(b) of the Sarbanes-Oxley Act.
Keywords: corporate governance, Wall Street reform, Dodd-Frank, proxy access, say on pay, executive compensation, disclosure
JEL Classifications: K22
