The Advisors' Blog

– Broc Romanek, CompensationStandards.com

Given the heft of the 1300-plus pages of Sen. Dodd’s reform bill that was released earlier today, I was inclined to first read the 11-page summary. Unfortunately, the summary is a pretty high-level document and I was forced into the abyss. Today’s draft bill differs quite a bit from Dodd’s bill released in November – and substantially different from legislation passed by the House in December (and the exec comp provisions differ from Sen. Menendez’s bill that I blogged about on Friday). [We’ll be posting the inevitable onslaught of memos in our “Regulatory Reform” Practice Area.]

As could be expected from such a comprehensive bill, there is a lot of ground covered. Here are the executive compensation highlights:

– The Table of Contents omits Title IX, Subtitle E “Accountability and Executive Compensation” and Subtitle F “Improvements to SEC’s Management” (ie. Sections 951-966 on pages 868-895) for some reason. Wishful thinking?

– Non-binding say-on-pay (Section 951, pages 868-869)

– Compensation Committee independence and consultant/lawyers independence (including authority to hire and “reasonable” of their compensation)(Section 952, pages 869-876)

– Disclosure of executive pay vs. performance (Section 953, pages 876-877)

– Clawbacks (Section 954, pages 877-878)

– Disclosure of executive and director hedging (Section 955, page 879)

– Excessive compensation paid by financial holding companies (Section 956, pages 879-880)

And here’s what to expect going forward from Sonnenschein: Chairman Dodd plans to have the Committee begin its markup of his revised bill on Monday, March 22 at 4:00 p.m., and to continue as necessary with the goal of completing the markup by the end of the week. Emphasizing that he wants the Senate to “move quickly” to pass financial regulatory reform, Senate Majority Leader Harry Reid (D-NV) indicated that he wants to bring the bill to a vote on the Senate floor before the Memorial Day recess at the end of May.

If this goal is met, the hope is that a conference committee will reconcile the House and Senate bills by the July 4 recess. Because the House and Senate bills are expected to be considerably different, a difficult conference is anticipated. Signaling his intention to protect the House bill, House Financial Services Committee Chairman Barney Frank (D-MA) stated that he wants all conference committee deliberations to be televised on C-SPAN.