SEC Releases Proposed Rules for Say-on-Pay and Golden Parachutes

On October 18, in accordance with Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), the Securities and Exchange Commission (“SEC”) proposed rules that would enable shareholders to have a say on executive compensation and “golden parachute” arrangements.

These proposed rules apply to all public companies subject to the federal proxy rules.  The SEC will seek public comment on these proposed rules until November 18, 2010 and expects to finalize the rules no later than March of 2011.  Under the proposals, companies subject to the rules must allow their shareholders to execute advisory votes regarding executive compensation and, in some cases, golden parachute arrangements.  The proposed rules also require affected companies to allow shareholders to vote on how often they will cast advisory votes regarding executive compensation.  The proposed rules would also increase the disclosure required for golden parachutes.