BNA reports (sub. req'd) that the House Financial Services Capital Markets Subcommittee has passed several bills that would repeal or revise several of Dodd-Frank's more onerous provisions. Among them are:
The Burdensome Data Collection Relief Act (H.R. 1062), sponsored by Nan Hayworth (R-N.Y.), would repeal Section 953(b) of the Dodd-Frank act. The provision requires public issuers to disclose the median annual total income for all employees except the CEO and the annual total income of the CEO, and to calculate the ratio comparing the two figures.
In my article Dodd-Frank: Quack Federal Corporate Governance Round II (September 7, 2010). Available at SSRN: http://ssrn.com/abstract=1673575, I explain that:
Section 953 requires that each reporting company’s annual proxy statement must contain a clear exposition of the relationship between executive compensation and the issuer’s financial performance.[1] It further requires disclosure of “the median of the annual total compensation of all employees of the issuer,” except the CEO, the CEO’s annual total compensation, and the ratio of the two amounts.[2] This requirement is expected to be hugely burdensome:
[It] means that for every employee, the company would have to calculate his or her salary, bonus, stock awards, option awards, nonequity incentive plan compensation, change in pension value and nonqualified deferred compensation earnings, and all other compensation (e.g., perquisites). This information would undoubtedly be extremely time-consuming to collect and analyze, making it virtually impossible for a company with thousands of employees to comply with this section of the Act.[3]
[1] Id.
[2] Dodd-Frank § 953.
[3] Warren J. Casey & Richard Leu, United States: New Executive Compensation Disclosures Under Dodd-Frank (August 3, 2010), Mondaq.com, http://www.mondaq.com/unitedstates/ article.asp?articleid=106962. See also Jean Eaglesham & Francesco Guerrera, Pay Law Sparks “Nightmare” on Wall St, Fin. Times, Aug. 31, 2010, at 1 (“The rules’ complexity means multinationals face a "logistical nightmare" in calculating the ratio, which has to be based on the median annual total compensation for all employees, warned Richard Susko, partner at law firm Cleary Gottlieb. "It's just not do-able for a large company with tens of thousands of employees worldwide.”).
The other reform bills include:
- The Small Company Capital Formation Act (H.R. 1070) sponsored by Rep. David Schweikert (R-Ariz.) would amend the 1933 Securities Act to exempt securities offerings below $50 million from SEC registration. Currently, the offering threshold is $5 million.
- The United States Covered Bonds Act (H.R. 33), sponsored by subcommittee chairman Scott Garrett (R-N.J.), would create a U.S. covered bonds market.
- The Small Business Capital Access and Job Preservation Act (H.R. 1082), introduced by Rep. Robert Hurt (R-Va.), would repeal Dodd-Frank's requirement that private equity funds register with the SEC.
- The Business Risk Mitigation and Price Stabilization Act (H.R. 1610), introduced by Rep. Michael Grimm (R-N.Y.), would exempt legitimate end-users from derivatives regulation mandated under the reform act.
- The Asset-Backed Market Stabilization Act (H.R. 1539) introduced by Rep. Steve Stivers (R-Ohio) would restore credit rating agencies' protection against expert liability under the ‘33 Act by repealing a Dodd-Frank provision that eliminated the exemption.
- H.R. 33, sponsored by Rep. Judy Biggert (R-Ill.), would amend the ‘33 Act to allow church plans to invest in collective trusts.
