Mandatory Shareholder Approval Of Executive Compensation: SEC Releases Final Rules On "Say on Pay"

The recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") mandates, for publicly traded companies, shareholder advisory votes on compensation packages provided to top executives and on "golden parachute" packages payable in connection with corporate transactions. This new law, which stems directly from the recent financial crisis and the perception that the crisis was fueled, at least in part, by compensation that purportedly rewarded excessive risk taking, constitutes the broadest, government-mandated requirements for executive compensation in many years.

The Securities and Exchange Commission (SEC) has now released guidance necessary to implement this and other executive compensation provisions of Dodd-Frank. We note below the most salient features of the SEC guidance.