The Securities and Exchange Commission on Tuesday gave shareholders the right to weigh in on pay packages for top executives to increase scrutiny of compensation practices blamed for fueling Wall Street risk-taking.
Bloomberg reports SEC commissioners voted 3-2 to enact the say-on-pay measure that will subject compensation plans to non-binding shareholder votes as often as once a year. The proposal is part of the agency's rulemaking under the Dodd-Frank Act.
The news service notes Dodd-Frank directed the SEC to let investors vote their views on executive pay amid public furor over incentives that rewarded the kind of risky trading that toppled Lehman Brothers Holdings and Bear Stearns.
The SEC amended the rule proposed in October to "specify that a say-on-pay vote is required at least once every three years, beginning with the first annual shareholders' meeting taking place on or after Jan. 21," Chairman Mary Schapiro (left) said in comments prepared for the meeting. The rule will also require companies to disclose whether the votes are binding and how they have considered the results of previous votes, she said.
The rule will also require enhanced disclosure on so-called golden parachute payments for executives whose companies are acquired, subjecting them to shareholder advisory votes along with the takeover agreements.
Bloomberg notes Republican Commissioners Kathleen Casey and Troy Paredes voted against the rule, saying smaller companies should've been given a permanent exemption instead of the temporary exclusion that would force them to hold votes at annual meetings held after Jan. 21, 2013.
