The Election and Corporate Governance: The Pressure on Dodd Frank Eased
After the election, the press noted statements by one prominent Republican that Obamacare is the law of the land. So, in the aftermath of the election, is Dodd Frank.
A victory for Governor Romney would likely have put pressure on Congress to repeal significant portions of Dodd Frank. As the WSJ reports, this hope has largely evaporated. The article noted the possibility of "small changes . . . in the next couple of years." In other words, Dodd Frank is going nowhere and at most there may be some modest fixes, something always possible with such a long and complex piece of legislation.
The election cycle also provided some evidence that opposition to Dodd Frank was costly at the ballot box. One of the people defeated in this cycle was Nan Hayworth from New York. Hayworth sponsored a number of efforts to repeal portions of Dodd Frank, including the disclosure of pay ratios. Arguments were made that Scott Brown in Massachusetts acted to undercut provisions in Dodd Frank.
With Dodd Frank no longer in doubt, certain provisions in the governance area will need to be implemented. One is Section 952(b) and the requirement that companies disclose compensation ratios. In addition, the Commission ought to reconsider shareholder access, the provision struck down by the DC Circuit. With Congress having affirmed the SEC's authority to adopt a shareholder access rule, the post election cycle may be the right time to consider another effort at implementing the requirement.