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The SEC has announced it will delay final rulemaking for five provisions outlined by last year’s Dodd-Frank Act, possibly deferring implementation until the 2013 proxy season for the compensation and governance provisions, reports a client alert from Pearl Meyer & Partners. This announcement comes on the heels of the recent failure of the SEC’s proxy access rule, which was struck down by a three-judge D.C. Circuit panel on the grounds that it violated the Administrative Procedure Act. The panel said the SEC did not properly consider the costs and benefits of the rule before its establishment. The SEC has 45 days to decide whether to repeal the decision or propose a revised version of the proxy access rule, also known as Rule 14a-11.
The five additional postponed compensation and governance rules are likely to be delayed past the deadline for implementation before the 2012 proxy season. These rules include:
- Pay vs. Performance Disclosure
- Ratio of Median Employee Pay to CEO Pay Disclosure
- Clawback Implementation and Disclosure
- Hedging Policy Disclosure
- Regulation of Incentive Pay at Financial Institutions
The SEC implemented Dodd-Frank Act-mandated rules on say on pay, say on frequency and say on golden parachutes in time for the 2011 proxy season. Final rules on compensation committee and advisor independence, compensation committee oversight authority, and disclosure of compensation consultant conflicts of interest are expected to be issued by the end of 2011, likely making them effective for the 2012 proxy season.