Not Just Financial Reform: What Every US Public Company Needs to Know About Dodd-Frank's Corporate Governance and Executive Compensation Reforms

Cleary Gottlieb hosted an interactive web seminar addressing the corporate governance and executive compensation provisions contained in the Dodd-Frank financial reform bill applicable to all U.S. public companies.

The 1.5 hour program was held on Wednesday, July 21. The panel was comprised of senior Cleary Gottlieb corporate governance and executive compensation practitioners including Alan L. Beller, former Director of the SEC’s Division of Corporation Finance, A. Richard Susko, Arthur H. Kohn, Sandra L. Flow and Mary E. Alcock.

The program addressed issues arising from the corporate governance and executive compensation provisions and explored how companies should begin to prepare themselves. Topics covered included:

• Say on Pay and Say When on Pay votes (likely required for many 2011 annual meetings)
  How should the proposal be structured? What voting standard applies? Do bylaws need to be amended? Will this require a preliminary proxy statement?
• Independent compensation committee, consultants, attorneys and other advisers
  How will this definition of independence differ from Section 16? Section 162(m)? existing stock exchange requirements? state law? What effect will this have on the qualification of current committee members? current consultants? current legal advisers? Do charters need to be amended? What additional disclosure will this entail?
• Broker non-votes on executive compensation matters
  What effect will this have on Say on Pay and Say When on Pay votes? on approval of new compensation plans? Should companies step up investor outreach efforts?
• Mandatory clawback policy
  How does it work? How best to coordinate it with existing company policies? with existing plans and agreements with executives? How is it different from SOX 304?
• Pay for performance disclosure
  What performance should be compared to what pay? Is this an invitation for the return of the stock graph to proxy statements?
• CEO/employee pay ratio disclosure
  What is the best way to contextualize this potentially inflammatory disclosure?
• Disclosure of director and employee hedging policies
  Will disclosure drive, or change, practice?
• Disclosure regarding CEO/Board chairman structure
  How is this different from current disclosure requirements?