A bill to provide shareholders with enhanced authority over the nomination, election, and compensation of public company executives.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Shareholder Bill of Rights Act of 
2009''.

SEC. 2. FINDINGS.

    Congress finds that--
            (1) among the central causes of the financial and economic 
        crises that the United States faces today has been a widespread 
        failure of corporate governance;
            (2) within too many of the Nation's most important 
        businesses and financial institutions, both executive 
        management and boards of directors have failed in their most 
        basic duties, including to enact compensation policies that are 
        linked to the long-term profitability of their institutions, to 
        appropriately analyze and oversee enterprise risk, and most 
        importantly, to prioritize the long-term health of their firms 
        and their shareholders;
            (3) such failure has led to the loss of trillions of 
        dollars in shareholder value, losses that have been borne by 
        millions of Americans who are shareholders through their 
        pension plans, 401(k) plans, and direct investments;
            (4) a key contributing factor to such failure was the lack 
        of accountability of boards to their ultimate owners, the 
        shareholders;
            (5) policies that serve to limit the ability of 
        shareholders to nominate and elect board members have served to 
        minimize the accountability of boards and management to 
        shareholders;
            (6) it has always been the intent of Congress that the 
        Securities and Exchange Commission should have full authority 
        to determine the use of the issuer proxy with regards to the 
        nomination and election of directors by shareholders; and
            (7) providing a greater voice to shareholders while not 
        impinging on management prerogatives is in the best interests 
        of shareholders, public corporations, and the economy as a 
        whole.

SEC. 3. SHAREHOLDER VOTE ON EXECUTIVE COMPENSATION DISCLOSURES.

    (a) Amendment.--The Securities Exchange Act of 1934 (15 U.S.C. 78a 
et seq.) is amended by inserting after section 14 the following new 
section:

``SEC. 14A. ANNUAL SHAREHOLDER APPROVAL OF EXECUTIVE COMPENSATION.

    ``(a) Separate Resolution Required.--Any proxy or consent or 
authorization for an annual or other meeting for which the proxy 
solicitation rules of the Commission require compensation disclosure of 
the shareholders occurring after the end of the 1-year period beginning 
on the date of enactment of this subsection, shall include a separate 
resolution subject to shareholder vote to approve the compensation of 
executives as disclosed pursuant to the compensation disclosure rules 
of the Commission (which disclosure shall include the compensation 
discussion and analysis, the compensation tables, and any related 
material).
    ``(b) Rule of Construction.--The shareholder vote referred to in 
subsection (a) shall not be binding on the board of directors and shall 
not be construed--
            ``(1) as overruling a decision by such board;
            ``(2) to create or imply any change to the current 
        fiduciary duties of such board;
            ``(3) to create or imply any additional fiduciary duty by 
        such board; or
            ``(4) to restrict or limit the ability of shareholders to 
        make proposals for inclusion in such proxy materials related to 
        executive compensation.
    ``(c) Shareholder Approval of Golden Parachute Compensation.--
            ``(1) Disclosure.--In any proxy solicitation material for 
        an annual or other meeting of the shareholders occurring after 
        the end of the 1-year period beginning on the date of enactment 
        of this subsection, that concerns an acquisition, merger, 
        consolidation, or proposed sale or other disposition of 
        substantially all of the assets of an issuer, the person making 
        such solicitation shall disclose in the proxy solicitation 
        material, in a clear and simple form in accordance with 
        regulations of the Commission, any agreements or understandings 
        that such person has with any principal executive officers of 
        such issuer (or of the acquiring issuer, if such issuer is not 
        the acquiring issuer) concerning any type of compensation 
        (whether present, deferred, or contingent) that are based on or 
        are otherwise related to the acquisition, merger, 
        consolidation, sale, or other disposition, and that have not 
        been subject to a shareholder vote under subsection (a).
            ``(2) Shareholder approval.--
                    ``(A) In general.--The proxy solicitation material 
                containing the disclosure required by paragraph (1) 
                shall require a separate shareholder vote to approve 
                such agreements or understandings.
                    ``(B) Rule of construction.--A vote by the 
                shareholders referred to in subparagraph (A) shall not 
                be binding on the board of directors and shall not be 
                construed--
                            ``(i) as overruling a decision by such 
                        board;
                            ``(ii) to create or imply any change to the 
                        current fiduciary duties of such board;
                            ``(iii) to create or imply any additional 
                        fiduciary duty by such board; or
                            ``(iv) to restrict or limit the ability of 
                        shareholders to make proposals for inclusion in 
                        such proxy materials related to executive 
                        compensation.''.
    (b) Deadline for Rulemaking.--Not later than 1 year after the date 
of the enactment of this Act, the Securities and Exchange Commission 
(in this Act referred to as the ``Commission'') shall issue final rules 
to carry out section 14A of the Securities Exchange Act of 1934, as 
added by this section.

SEC. 4. SHAREHOLDER INPUT IN BOARD ELECTIONS.

    Section 14A of the Securities Exchange Act of 1934, as added by 
this Act, is amended by adding at the end the following:
    ``(d) Confirmation of Commission Authority on Shareholder Access to 
Proxies for Board Nominations.--
            ``(1) Commission rules.--The Commission shall establish 
        rules relating to the use by shareholders of proxy solicitation 
        materials supplied by the issuer for the purpose of nominating 
        individuals to membership on the board of directors of an 
        issuer.
            ``(2) Shareholder requirements.--The rules of the 
        Commission under this paragraph relating to the use by 
        shareholders of proxy solicitation materials supplied by the 
        issuer for the purpose of nominating individuals to membership 
        on the board of directors of an issuer may not provide for such 
        use, unless the shareholder, or a group of shareholders acting 
        by agreement, has beneficially owned, directly or indirectly, 
        an aggregate of not less than one percent of the voting 
        securities of the issuer for at least the 2-year period 
        preceding the date of the next scheduled annual meeting of the 
        issuer.''.

SEC. 5. CORPORATE GOVERNANCE STANDARDS.

    Section 14A of the Securities Exchange Act of 1934, as added by 
this Act, is amended by adding at the end the following:
    ``(e) Corporate Governance Standards.--
            ``(1) Listing standards.--
                    ``(A) In general.--Not later than 1 year after the 
                date of enactment of this subsection, the Commission 
                shall, by rule, direct the national securities 
                exchanges and national securities associations to 
                prohibit the listing of any security of an issuer that 
                is not in compliance with any of the requirements of 
                paragraphs (2) through (5), notwithstanding any other 
                provision of law.
                    ``(B) Opportunity to comply and cure.--The rules 
                under this paragraph shall provide for appropriate 
                procedures for an issuer to have an opportunity to come 
                into compliance with the requirements of this 
                subsection and to cure any defects that would be the 
                basis for a prohibition under subparagraph (A), before 
                the imposition of such prohibition.
                    ``(C) Authority to exempt.--The Commission may, by 
                rule or order, exempt certain issuers from any or all 
                of the requirements of this subsection and the rules 
                issued under this subsection, based on the size of the 
                issuer, market capitalization, public float, number of 
                shareholders of record, or other criteria, as the 
                Commission deems necessary or appropriate.
            ``(2) Director independence.--Each issuer shall provide in 
        governing documents or in a public statement of corporate 
        policy that, consistent with the status of the issuer as a 
        company having a class of equity securities that are registered 
        under subsection (b) or (g) of section 12, the chairperson of 
        the board of directors of the issuer--
                    ``(A) shall be independent, as determined in 
                accordance with the rules of the exchange on which the 
                securities of such issuer are listed, and otherwise by 
                rule of the Commission; and
                    ``(B) shall not have previously served as an 
                executive officer of the issuer.
            ``(3) Annual elections required.--Each issuer shall provide 
        in its governing documents that each member of the board of 
        directors of the issuer shall be subject to annual election by 
        the shareholders. Nothing in this subsection may be construed 
        to establish a maximum period of service, or otherwise limit 
        the terms of service, on the board of directors of an issuer.
            ``(4) Commission rules on elections.--In board elections--
                    ``(A) directors in uncontested elections shall be 
                elected by a majority of votes cast as to each nominee;
                    ``(B) if such election is contested, where the 
                number of nominees exceeds the number of directors to 
                be elected, directors shall be elected by the vote of a 
                plurality of the shares represented at an any meeting 
                and entitled to vote; and
                    ``(C) if a member of the board of directors of an 
                issuer is not elected to a new term in an uncontested 
                election--
                            ``(i) such director shall tender his or her 
                        resignation to the board of directors; and
                            ``(ii) the board of directors shall--
                                    ``(I) accept such resignation;
                                    ``(II) determine a date on which 
                                such resignation will take effect, 
                                within a reasonable period of time, as 
                                established by the Commission; and
                                    ``(III) make that date public 
                                within a reasonable period of time.
            ``(5) Risk committee.--
                    ``(A) In general.--Each issuer shall, 1 year after 
                the date of issuance of final rules under subparagraph 
                (B), establish a risk committee, comprised entirely of 
                independent directors, which shall be responsible for 
                the establishment and evaluation of the risk management 
                practices of the issuer.
                    ``(B) Commission rulemaking.--The Commission shall 
                issue final rules regarding the establishment of risk 
                committees under this paragraph, not later than 1 year 
                after the date of enactment of this subsection.''.

Summary: Shareholder Bill of Rights Act of 2009 - Amends the Securities Exchange Act of 1934 to require any proxy or consent or authorization for an annual or other meeting for which the proxy solicitation rules of the Securities Exchange Commission (SEC) require shareholder compensation disclosure to include a separate resolution subject to shareholder vote to approve the compensation of executives.

Requires any person making a proxy solicitation concerning an acquisition, merger, consolidation, or proposed sale or other disposition of substantially all of the assets of an issuer (transaction) to disclose in the proxy solicitation material, in a clear and simple form, any agreements or understandings of that person with any of the issuer's principal executive officers concerning any type of (golden parachute) compensation based on or otherwise related to the transaction that have not been subject to a shareholder vote.

Requires the proxy solicitation material for a golden parachute to require a separate shareholder vote to approve it.

Directs the SEC to establish rules for the use by shareholders of issuer proxy solicitation materials for the purpose of nominating individuals to membership on the issuer's board of directors. Prohibits such rules from providing for such use, however, unless the shareholder, or a group of shareholders acting by agreement, has beneficially owned, directly or indirectly, an aggregate of at least 1% of the issuer's voting securities for at least the two-year period preceding the date of the issuer's next scheduled annual meeting.

Requires the SEC to direct the national securities exchanges and national securities associations to prohibit the listing of any security of an issuer that is not in compliance with any specified requirements pertaining to director independence, mandatory annual elections, SEC rules on elections, and mandatory establishment of a risk committee to establish and evaluate the issuer's risk management practices.