On November 19th, 2009, the University of Delaware’s Weinberg Center for Corporate Governance hosted a seminar entitled “Federal and State Corporate Governance Standards.” The program was designed to address the proposed legislative changes on governance and to further the dialogue surrounding the various governance models being considered.
The panel addressed which of the two provided the most appropriate arena for responding to the evolving needs of corporations and their shareholders. Specifically, the panelists examined the long-term implications of recent reform legislation which will federalize many elements of both corporate governance and executive compensation, which had typically fallen under state law regimes.
The panel was moderated by Weinberg Center Director and Professor Charles Elson. Present were:
• The Honorable J. Travis Laster, Vice Chancellor, Delaware Court of Chancery
• John Castellani, President, Business Roundtable
• David Becker, General Counsel, Securities and Exchange Commission
• A. Gilchrist Sparks, Partner, Morris, Nichols, Arsht & Tunnell LLP
• William Clark, Senior Partner, Drinker Biddle & Reath LLP
• Harvey Goldschmidt, Dwight Professor of Law, Columbia Law School
• Ann Yerger, Executive Director, Council of Institutional Investors
• Norman Monhait, Member, Rosenthal, Monhait & Goddess, P.A.
• John Keenan, AFSCME
Interestingly, much of the debate centered on why the proposals changes were initiated, not what changes were included. Senator Schumer’s “Shareholder Bill of Rights”, Congressman Peters’ “Shareholder Empowerment Act”, and Senator Dodd’s “Restoring American Financial Stability Act of 2009” include the following; (1) majority voting, (2) independent compensation committees and consultants, (3) annual advisory vote on executive compensation, clawback provisions, elimination of golden parachutes, enhanced compensation disclosure requirements (4) split chairperson and CEO, and (5) elimination of staggered boards through annual elections.
Whether there remains a role for private ordering under state law under a federalized/SEC approach remains to be seen. What may be most evident, however, is that if the provisions on governance in the Dodd Bill become law, an already strapped for resources SEC will have a lot more on its plate. Given its current resourcing, and track record in the financial crisis, it is no surprise that critics challenge whether the agency will be up to the new tasks of governance cop for the nation’s public corporations.
The panel addressed which of the two provided the most appropriate arena for responding to the evolving needs of corporations and their shareholders. Specifically, the panelists examined the long-term implications of recent reform legislation which will federalize many elements of both corporate governance and executive compensation, which had typically fallen under state law regimes.
The panel was moderated by Weinberg Center Director and Professor Charles Elson. Present were:
• The Honorable J. Travis Laster, Vice Chancellor, Delaware Court of Chancery
• John Castellani, President, Business Roundtable
• David Becker, General Counsel, Securities and Exchange Commission
• A. Gilchrist Sparks, Partner, Morris, Nichols, Arsht & Tunnell LLP
• William Clark, Senior Partner, Drinker Biddle & Reath LLP
• Harvey Goldschmidt, Dwight Professor of Law, Columbia Law School
• Ann Yerger, Executive Director, Council of Institutional Investors
• Norman Monhait, Member, Rosenthal, Monhait & Goddess, P.A.
• John Keenan, AFSCME
Interestingly, much of the debate centered on why the proposals changes were initiated, not what changes were included. Senator Schumer’s “Shareholder Bill of Rights”, Congressman Peters’ “Shareholder Empowerment Act”, and Senator Dodd’s “Restoring American Financial Stability Act of 2009” include the following; (1) majority voting, (2) independent compensation committees and consultants, (3) annual advisory vote on executive compensation, clawback provisions, elimination of golden parachutes, enhanced compensation disclosure requirements (4) split chairperson and CEO, and (5) elimination of staggered boards through annual elections.
Whether there remains a role for private ordering under state law under a federalized/SEC approach remains to be seen. What may be most evident, however, is that if the provisions on governance in the Dodd Bill become law, an already strapped for resources SEC will have a lot more on its plate. Given its current resourcing, and track record in the financial crisis, it is no surprise that critics challenge whether the agency will be up to the new tasks of governance cop for the nation’s public corporations.
Comments