The Financial Reform Act: SEC Issues Proposed Say-on-Pay Rules

The SEC recently issued proposed rules to implement the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act that mandate shareholder advisory votes on executive compensation (the say-on-pay vote), on the frequency of the say-on-pay vote, and on golden parachute compensation arrangements, as well as related disclosure requirements.

The comment period for the proposed rules ends on November 18, 2010. Because the Financial Reform Act requires companies to comply with the say-on-pay and say-on-frequency provisions for meetings of shareholders occurring on or after January 21, 2011, whether or not the SEC issues final rules by that date, the SEC is expected to push for adoption of final rules as soon as possible after the comment period expires. Because SEC rulemaking is required with respect to the requirements for golden parachute arrangements, the say-on-golden parachute vote and related disclosure will not be required for merger proxy statements