The Dodd-Frank Act, which was signed into law on July 21, 2010, requires regulators from 21 agencies to issue 400 final rules. Through July 1, 2011, 38 rules are finalized and regulators missed deadlines for 26 rules. What does this mean for public companies?
Are We There Yet?
Not even close. As of July 1, regulators had finalized less than 10% of the rules required under the Act. Scott O’Malia, a commissioner at the Commodity Futures Trading Commission, which must issue 56 rules, told The Wall Street Journal, “The reality is, we’re not going to complete the work in the timetable Congress set.” The SEC, on the hook for more Dodd-Frank-related regulations than any other agency, has adopted 12 rules, proposed 43 rules, missed deadlines on eight and has 35 to go. An additional 122 rule deadlines occur in the third quarter of this year, the one-year anniversary of the Act.
Rulemaking Through July 1, 2011
Public companies should anticipate the adoption of a significant number of final rules throughout the remainder of 2011 addressing:
- Disclosure of “pay vs. performance,” CEO-employee pay ratios and hedging by employees and directors
- Executive compensation “clawbacks”
- Exchange listing standards regarding compensation committee independence and factors affecting compensation adviser independence
- Disclosure regarding compensation consultant conflicts of interest
- Disclosure related to “conflict minerals”
- Disclosure of mine safety information
- Enhanced disclosure by resource extraction issuers
What Should You Do Now?
Companies should prepare for these rules to be in effect for the 2012 proxy season. The compensation rules, in particular, are likely to be effective for next proxy season and will require significant advance planning this fall. However, do not be surprised if regulators do not meet many of the Act’s deadlines.
Additional Articles from the Summer 2011 Public Company Forum:
Risky Business: Effective Compliance Programs
The SEC’s New Whistleblower Rules: Now What?