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Senate Financial Reform Bill Signals Important Changes to Corporate Governance Rules

By Anthony F. Maul

The final version of the financial reform bill passed by the U.S. Senate on May 20, 2010 would alter existing corporate governance rules on matters such as mandatory proxy access, majority voting requirements, separation of certain managerial positions, and broker discretionary voting. In the area of proxy access, the Senate bill is weaker than the bill passed by the House last year. Whereas the House bill would require the SEC to adopt proxy access rules providing that shareholders may nominate directors using the company?s proxy materials, the Senate bill merely authorizes the SEC to adopt such rules. Other corporate governance provisions of the bill would require the implementation of majority voting in uncontested elections; mandate that companies disclose whether and why it has elected to separate its chairman of the board and CEO positions; and require that stock exchanges prohibit broker discretionary voting on significant matters, including election of directors and approval of executive compensation. The Senate and House bills are expected to be reconciled prior to July 4, 2010.

Full post as published by PomTalk on June 02, 2010 (boomark / email).