Executive Compensation and TARP Recipients: Senator Dodd's Letter on "Say on Pay" Voting and CEO/CFO Certifications

On February 20, 2009, Senator Christopher Dodd, Chairperson of the Committee on Banking, Housing and Urban Affairs sent a letter to Mary Schapiro, Chairperson of the Securities and Exchange Commission, stating his views on the effective date of the requirements of Section 111(e) “Shareholder Approval of Executive Compensation” and Section 111(b)(4) “Certification on Compliance” of the Emergency Economic Stabilization Act of 2008 (“EESA”), as revised by the American Recovery and Reinvestment Act of 2009.

Senator Dodd stated that:

• “Say on Pay” voting applies to preliminary and definitive proxy statements filed after February 17, 2009, except for definitive proxy statements filed with respect to preliminary proxy statements that were filed on or before February 17, 2009; and
  
  
• The requirement for CEO and CFO certifications is not effective until the Department of Treasury releases its standards on executive compensation and corporate governance.

The attached memorandum briefly outlines Senator Dodd’s statements on the intended effective dates of Section 111(e) and Section 111(b)(4) of EESA, and outlines the issues that TARP recipients now need to address. Please contact any of your other regular contacts at the firm if you have any questions concerning the implications of Senator Dodd’s statements.