Treasury Department Proposes New "Say-on-Pay" Legislation
July 27, 2009
On July 16, 2009, the U.S. Treasury Department delivered draft “say-on-pay” legislation to Congress that would require all publicly traded companies to provide shareholders a non-binding vote on executive compensation as disclosed in the company’s proxy statement.
As proposed, the disclosures subject to a shareholders’ vote would include tabular data summarizing salary, bonuses, stock and option awards, and total compensation for the issuer’s senior executive officers and narrative summaries of golden parachute and pension compensation, and of the board of directors’ compensation decisions. Additionally, the proposed legislation would mandate a separate stockholder vote on golden parachutes provided to executives in connection with a merger or acquisition of an issuer. Issuers would be required to include and clearly disclose in their soliciting materials the exact amounts senior executive officers would receive if the merger or acquisition is completed.
In the proposal, Treasury noted that similar regulations have been adopted in the United Kingdom and that several public companies in the United States have voluntarily submitted to “say-on-pay.” Treasury believes that increased dialogue between shareholders and issuers has led directly to the modification of compensation practices. The legislation, if adopted, would be effective for annual meetings held after December 15, 2009.
http://www.treas.gov/press/releases/tg219.htm
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