Friday, December 18, 2009
Final Rule: Proxy Disclosure Enhancements
Beginning in the upcoming annual reporting and proxy season, the new rules will improve corporate disclosure regarding risk, compensation and corporate governance matters when voting decisions are made.
In particular, the new rules require disclosures in proxy and information statements about:
The relationship of a company's compensation policies and practices to risk management.
The background and qualifications of directors and nominees.
Legal actions involving a company's executive officers, directors and nominees.
The consideration of diversity in the process by which candidates for director are considered for nomination.
Board leadership structure and the board's role in risk oversight.
Stock and option awards to company executives and directors.
Potential conflicts of interests of compensation consultants.
The new rules, which will be effective Feb. 28, 2010, also require quicker reporting of shareholder voting results."
Wednesday, May 13, 2009
And, according to Reuters, the second proposal "reforms..financial industry compensation practices to discourage excessive risk-taking, which is considered to have sown the seeds of the current credit crisis."
The two proposals are linked and reinforcing. The derivatives reform play seeks to eliminate or regulate a key tool used by executives at financial institutions to justify large amounts of compensation. (Unless you can produce outsized returns via standard financial instruments, extremely generous pay packages are unlikely to be received.)
And, in case that fails, the compensation reform play says we will limit your compensation no matter what you do.
All in all, a very good day.
Tuesday, March 10, 2009
“(e) SHAREHOLDER APPROVAL OF EXECUTIVE COMPENSATION.—
(1) ANNUAL SHAREHOLDER APPROVAL OF EXECUTIVE COMPENSATION.—
Any proxy or consent or authorization for an annual or other meeting of the shareholders of any TARP recipient during the period in which any obligation arising from financial assistance provided under the TARP remains outstanding shall permit a separate shareholder vote to approve the compensation of executives, as disclosed pursuant to the compensation disclosure rules of the Commission (which disclosure shall include the compensation discussion and analysis, the compensation tables, and any related material).
(2) NONBINDING VOTE.—A shareholder vote described in paragraph (1) shall not be binding on the board of directors of a TARP recipient, and may not be construed as overruling a decision by such board, nor to create or imply any additional fiduciary duty by such board, nor shall such vote be construed to restrict or limit the ability of shareholders to make proposals for inclusion in proxy materials related to executive compensation.”
Friday, December 21, 2007
"Securities and Exchange Commission Chairman Christopher Cox today launched the first-ever online tool that enables investors to easily and instantly compare what 500 of the largest American companies are paying their top executives. The new database highlights the power of interactive data to transform financial disclosure.
The Executive Compensation Reader - available today on the SEC's Web site at http://www.sec.gov/xbrl - builds on the Commission's new requirements that went into effect earlier this year to dramatically enhance clarity and completeness of executive compensation disclosure."
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