Recently, I wrote a blog post about the anticipated update to the Financial CHOICE Act and a leaked memo from Jeb Hersarling, Chair of the House Financial Services Committee, to the Committee’s Leadership Team regarding proposed changes from the original Financial CHOICE Act introduced last year.

For legal teams updating directors and management teams on developments in Congress that may impact them in the near term, here are just some of the items to consider for this Act that would have an immediate impact on public companies (and probably well-received):

  • Repeal pay ratio rule (Section 953(b) of the Dodd-Frank Act)
  • Require say on pay only when there is a “material change to the compensation of executives of an issuer from the previous year”
  • Prohibit universal proxy access
  • Raise shareholder proposal requirements
  • Limit the Dodd-Frank Act (DFA) clawback policy disclosure rule to only those executives that had control or authority over the financial reporting that resulted in the accounting restatement
  • Repeal hedging disclosure requirement from Section 955 of the DFA, and
  • Repeal Chairman/CEO disclosure from Section 972 of the DFA.

Also, on the capital markets front –

  • “Test the waters” will apply to all companies not solely emerging growth companies (EGCs) and
  • Confidential filings will apply to all IPOs, not just EGCs.

While the above items only cover a small slice of the Act’s provisions (most related to banking issues and the Consumer Financial Protection Bureau), we wanted to flag a few of the noticeable items for our public company clients. Sources say that the next draft of the Act may come out in March with a pretty quick mark-up.