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The Text of the Dodd-Frank Act
International Association of
Risk and Compliance Professionals (IARCP)
Dodd Frank Act Section 951
Subtitle E—Accountability and Executive
Compensation
SEC. 951. SHAREHOLDER VOTE ON EXECUTIVE
COMPENSATION DISCLOSURES.
The Securities Exchange
Act of 1934 (15 U.S.C. 78a et seq.) is amended by inserting after
section 14 (15 U.S.C. 78n) the following:
‘‘SEC. 14A.
SHAREHOLDER APPROVAL OF EXECUTIVE
COMPENSATION.
‘‘(a) SEPARATE RESOLUTION REQUIRED.—
‘‘(1) IN GENERAL.—Not less frequently than once every 3
years, a proxy or consent or authorization for an annual or other
meeting of the shareholders for which the proxy solicitation rules
of the Commission require compensation disclosure shall include a
separate resolution subject to shareholder vote to approve the
compensation of executives, as disclosed pursuant to section
229.402 of title 17, Code of Federal Regulations, or any successor
thereto.
‘‘(2) FREQUENCY OF VOTE.—Not
less frequently than once every 6 years, a proxy or consent or
authorization for an annual or other meeting of the shareholders
for which the proxy solicitation rules of the Commission require
compensation disclosure shall include a separate resolution
subject to shareholder vote to determine whether votes on the
resolutions required under paragraph (1) will occur every 1, 2, or
3 years.
‘‘(3) EFFECTIVE DATE.—The
proxy or consent or authorization for the first annual or other
meeting of the shareholders occurring after the end of the 6-month
period beginning on the date of enactment of this section shall
include—
‘‘(A) the resolution described in paragraph (1);
and
‘‘(B) a separate resolution subject to shareholder vote
to determine whether votes on the resolutions required under
paragraph (1) will occur every 1, 2, or 3 years.
‘‘(b)
SHAREHOLDER APPROVAL OF GOLDEN PARACHUTE
COMPENSATION.—
‘‘(1) DISCLOSURE.—In any proxy or
consent solicitation material (the solicitation of which is
subject to the rules of the Commission pursuant to subsection (a))
for a meeting of the shareholders occurring after the end of the
6-month period beginning on the date of enactment of this section,
at which shareholders are asked to approve an acquisition, merger,
consolidation, or proposed sale or other disposition of all or
substantially all the assets of an issuer, the person making such
solicitation shall disclose in the proxy or consent solicitation
material, in a clear and simple form in accordance with
regulations to be promulgated by the Commission, any agreements or
understandings that such person has with any named executive
officers of such issuer (or of the acquiring issuer, if such
issuer is not the acquiring issuer) concerning any type of
compensation (whether present, deferred, or contingent) that is
based on or otherwise relates to the acquisition, merger,
consolidation, sale, or other disposition of all or substantially
all of the assets of the issuer and the aggregate total of all
such compensation that may (and the conditions upon which it may)
be paid or become payable to or on behalf of such executive
officer.
‘‘(2) SHAREHOLDER APPROVAL.—Any
proxy or consent or authorization relating to the proxy or consent
solicitation material containing the disclosure required by
paragraph (1) shall include a separate resolution subject to
shareholder vote to approve such agreements or understandings and
compensation as disclosed, unless such agreements or
understandings have been subject to a shareholder vote under
subsection (a).
‘‘(c) RULE OF
CONSTRUCTION.—The shareholder vote referred to in
subsections (a) and (b) shall not be binding on the issuer or the
board of directors of an issuer, and may not be construed—
‘‘(1) as overruling a decision by such issuer or board of
directors;
‘‘(2) to create or imply any change to the
fiduciary duties of such issuer or board of directors;
‘‘(3) to create or imply any additional fiduciary duties for such
issuer or board of directors; or
‘‘(4) to restrict or limit
the ability of shareholders to make proposals for inclusion in
proxy materials related to executive compensation.
‘‘(d)
DISCLOSURE OF VOTES.—Every
institutional investment manager subject to section 13(f) shall
report at least annually how it voted on any shareholder vote
pursuant to subsections (a) and (b), unless such vote is otherwise
required to be reported publicly by rule or regulation of the
Commission.
‘‘(e) EXEMPTION.—The
Commission may, by rule or order, exempt an issuer or class of
issuers from the requirement under subsection (a) or (b). In
determining whether to make an exemption under this subsection,
the Commission shall take into account, among other
considerations, whether the requirements under subsections (a) and
(b) disproportionately burdens small issuers.’’.
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