The SEC is seeking investor input on its proposals to give shareholders a non-binding vote on executive compensation and some “golden parachute” severance arrangements.
Under the proposed rules, publicly traded companies would have to provide shareholders with an advisory vote on executive pay and seek input from shareholders as to how frequently the say on pay vote will take place. Draft Rule 14a-21(b) would require issuers to solicit shareholder views, not less frequently than once every six years, as to whether the shareholder vote on the compensation “will occur every 1, 2, or 3 years.”
Companies will also be required to provide merger-related compensation disclosures. The proposed rules would require companies to provide a shareholder advisory vote to approve certain “golden parachute” compensation arrangements in merger proxy statements.
Institutional Investment Manager Reporting of Votes
At the same time, the SEC has also proposed rules that would require institutional investors to submit an annual report to the SEC on their say-on-pay votes. The proposal would generally apply to every institutional investment manager with at least $100 million of equities under management .
Investors would be required to identify securities voted, describe the executive compensation matters voted on, disclose the number of shares over which the manager held voting power and the number of shares voted, and how the manager voted. Reports would have to be filed no later than August 31 of each year, for the twelve months ended June 30.
The Dodd-Frank law requires that the SEC effects “say on pay regulations” for any AGM taking place after 21 January 2011. Consultation closes on 18 November 2010.
Links
http://www.sec.gov/rules/proposed/2010/33-9153.pdf
http://www.sec.gov/rules/proposed/2010/34-63123.pdf