SEC Proposes Shareholder Votes on Executive Compensation for U.S. Companies

The U.S. Securities and Exchange Commission has proposed new rules to require U.S. companies to provide their shareholders with non-binding votes on executive compensation ("say-on-pay") and compensation in connection with changes in control ("golden parachute" compensation). The rules were mandated by the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act. Voting on executive compensation will begin with shareholder meetings held on or after January 21, 2011 (six months after the enactment of the Dodd-Frank Act), and voting on golden parachute compensation will begin after the SEC's proposals become final (expected in the first quarter of 2011).

The say-on-pay and golden parachute votes will be advisory in nature so they will not bind the issuer's board of directors to any particular course of action. However, issuers will have to disclose in their annual compensation discussion and analysis whether and how they have taken previous voting