SEC Adopts Final Proxy Rule Regarding Say-On-Pay Vote For TARP Recipients

When Congress adopted the American Recovery and Reinvestment Act of 2009 (ARRA) in February of last year, it required that any entity that was a recipient of financial assistance under the Troubled Asset Relief Program—commonly known as TARP—have a separate shareholder vote to approve compensation of executives as disclosed in accordance with the compensation rules of the Securities and Exchange Commission.

In accordance with the ARRA requirements, the SEC has now adopted changes to its proxy rules, including a new Rule 14a-20, to address this say-on-pay vote requirement. The rule changes are effective 30 days after publication in the Federal Register.

These proxy rule changes are in addition to those which were adopted on December 16, 2009, and were applicable to all public companies.