Wall Street Reform bill passed by the Senate; awaits President's signature

The Senate passed the financial reform bill today (Dodd-Frank Wall Street Reform and Consumer Protection Act) and sent it President Obama, who is expected to sign it into law in the next few days. ShareOwners.org and its members played an active role in pushing Congress to include in the legislation important new tools for investors to hold corporate boards and management accountable, including: (1) reaffirming the SEC’s authority to adopt rules making it easier for long-term shareowners to nominate directors when change is needed on corporate boards; (2) requiring companies to seek advisory shareowner votes on the compensation of senior executives (“say on pay”) at least once every three years; and (3) restricting discretionary broker voting on management proposals relating to executive compensation, including “say on pay” votes. The battle now shifts to the SEC, which is expected to issue a proxy access rule proposal in the coming weeks.

In related developments, the SEC yesterday unanimously agreed to issue a concept release on the ways proxies are distributed, allocated, voted and tabulated, often referred to as “proxy plumbing.” The SEC last undertook a comprehensive review of proxy plumbing during the 1970s and 80s—more than 30 years ago, even though services, methods, practices and the markets have changed dramatically since then. The staff and the commissioners, citing the long wait, underscored the urgency of taking on this important task at this time.

The release addresses three principal areas: (1) the accuracy, transparency and efficiency in voting proxies; (2) the adequacy of present communications to shareholders; and (3) the question of whether voting and economic interests are always aligned in voting. Comments on the concept release, http://www.sec.gov/rules/concept/2010/34-62495.pdf, are due in the next 90 days.