by James Hyatt
Shareholder activists will find several provisions to their liking in the Senate Finance Committee’s new 1,566-page financial reform bill, which passed the U.S. Senate by a vote of 59-39; the measure must be reconciled with a House bill.
The Senate measure includes major provisions affecting the election of corporate board members and executive compensation.
The Senate bill requires directors to win by majority vote in uncontested elections, according to The Wall Street Journal, and would give the SEC authority to grant shareholders proxy access to nominate directors.
On executive compensation, the bill gives shareholders the right to a nonbinding vote on executive pay, excluding golden parachutes. The Senate bill also requires so-called clawback provisions that force executives to repay any earnings based on inaccurate financial statements, according to the New York Times.
(In the House bill, shareholders would have the same rights on say-on-pay. Regulators would have a say on compensation practices, not on pay itself, according to the Associated Press.)
The Wall Street Journal reported that the Senate bill also creates an Investment Advisory Committee within the Securities and Exchange Commission, as well as an Office of Investor Advocate within the SEC to identify problems in dealing with SEC.
The Senate bill also creates a federal regulator to write and enforce rules protecting consumers of financial products like checking accounts, mortgages and payday loans. The bill increases the authority of state regulators to enforce protections, according to the Times.
Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, told CNBC that a bank reform bill will be signed by the president well before July 4. “I’ve cleared my calendar for the month of June to get this done,” said Frank.
This article has been updated from the original to reflect subsequent publication of the full text of the Senate Finance Committee Bill.