Corporate Governance
While almost all of the regulatory overhaul being considered by Congress deals with financial firms, one section of each chamber's bill applies to publicly traded companies more broadly. The measures follow in the spirit of the Sarbanes-Oxley Act of 2002, which was passed in the wake of corporate and accounting scandals at companies like Enron, Tyco and WorldCom. The new measures include requiring corporate boards' compensation committees to be entirely made up of independent directors and companies to have a policy for taking back executive pay if that pay proves later to have been based on inaccurate financial statements.
The logic of including these measures in the current reform is that parts of the financial sector pressure corporations into a short-term mentality — immediate profitability becomes the goal, not long-term stability and growth. While that dynamic may have been at play at certain companies in the most-recent crisis — for example, at publicly traded banks — it wasn't suddenly more of a problem in industry in general. Nonetheless, the current bills take the opportunity to attach existing "say on pay" legislation, which would require companies to let shareholders vote once a year on whether to not the firm's compensation practices are legitimate. That vote, though, would be advisory, and could be ignored by the company.