The Securities and Exchange Commission issued final rules to implement mandatory say-on-pay votes for public companies. The 152-page adopting release varies somewhat from the proposed rules, including a two-year delay for smaller reporting companies.
In a three-to-two vote at a Jan. 25 open meeting, the SEC adopted rules to implement Section 951 of the Dodd-Frank Act, which requires advisory shareholder votes to approve executive pay, votes on the frequency of say-on-pay votes, and enhanced disclosure of and votes to approve golden parachute agreements in connection with mergers and acquisitions. Under the law, say-on-pay votes are required at least every three years, beginning with the first annual shareholders’ meeting taking place on or after Jan. 21, 2011. Companies must also hold shareholders votes on the frequency of say-on-pay with the option of one, two, or three years, or to abstain. Frequency votes are required to be held every six years.
