Senator Richard Shelby (R-AL) introduced two bills relating to the Dodd-Frank Wall Street Reform and Consumer Protection Act in March 2013. According to Senator’s Shelby’s press release, the first, the Dodd-Frank Wall Street Reform and Consumer Protection Technical Corrections Act of 2013, “focuses purely on technical corrections of non-substantive inaccuracies and omissions in the statute.” However, in addition to extending deadlines and proposing technical corrections, such as correcting spelling errors, inserting commas and renumbering certain sections, the bill also proposes some substantive changes.
Section 11(3) of the Technical Corrections Act, would amend Section 953 of the Dodd-Frank Act to provide the SEC with authority to exempt by rule or order an issuer or class of issuers from the requirements of Section 14(i) of the Exchange Act (added by Section 953(a) of the Dodd- Frank Act) or Section 953(b) of the Dodd-Frank Act. Section 14(i), “Disclosure of Pay Versus Performance”, requires the SEC to adopt rules requiring each issuer (other than an emerging growth company) in any proxy or consent solicitation material for an annual meeting of shareholders to disclose information showing the relationship between exe cutive compensation actually paid and the financial performance of the issuer, taking into account any change in the value of the company’s stock and any company dividends paid or distributions made. Section 953(b) of the Dodd-Frank Act requires the SEC to amend Item 402 of Regulation S-K, “Executive Compensation”, to require disclosure of the median annual total compensation of all employees of the issuer, except the chief executive officer, the annual total compensation of the chief executive officer and the ratio between the two. In determining whether to provide an exemption, Section 11(3) requires the SEC to take into account whether the requirements of Section 953(a) and Section 953(b) of the Dodd-Frank Act disproportionately burden small issuers.
According to Senator Shelby’s press release, the second bill, the Financial Regulatory Responsibility Act of 2013, “would hold financial regulators accountable for rigorous, consistent economic analysis on every new rule they propose.” Under the Regulatory Responsibility Act, each notice of proposed rulemaking by certain regulatory agencies named in the Responsibility Act, including the SEC, would be required to include a detailed economic analysis covering at a minimum 12 elements set forth in the bill. If the agency determines that the quantified costs of the proposed rule exceed the quantified benefits determined pursuant to the required economic analysis, the financial regulator would not be permitted to publish a final rule, absent a waiver from Congress.