James Hamilton, J.D., LL.M., Principal Analyst, CCH Federal Securities Law Reporter; and CCH Derivatives Regulation Law Reporter.
The House passed legislation mandating shareholder advisory votes on executive compensation as part of the overall reform of financial regulation. Final House passage is expected later this week. The vote was 237-185. The legislation builds on the SEC’s executive pay disclosure rules to require that public companies include in their annual proxy to investors the opportunity to vote on the company's executive pay plans. The Corporate and Financial Institution Compensation Fairness Act would also require independent board compensation committees and independent compensation consultants. The legislation further requires all financial institutions, including brokers, dealers and investment advisers, to disclose compensation structures that include any incentive based elements. The measure also requires federal financial regulators to proscribe inappropriate or imprudently risky compensation practices as part of solvency regulation.
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