Monday, June 29, 2009

July 1 SEC Open Meeting to Include "Say on Pay" Proposals

Among the three items on the SEC's July 1 open meeting agenda is a set of proposals on shareholder resolutions on compensation of executives, or "say on pay." Although the particulars of the proposals are not yet known, the Commission's release under the Sunshine Act
states that the Commission staff will present three items, the first two deal directly with "say on pay" issues, while the third item touches on the subject obliquely.
Item 1: The Commission will consider whether to propose amendments to the proxy rules under the Securities Exchange Act of 1934 to set forth requirements for U.S. registrants that have received financial assistance under the Troubled Asset Relief Program and that are required, pursuant to Section 111(e) of the Emergency Economic Stabilization Act of 2008, to include an advisory shareholder vote on executive compensation.

Item 2: The Commission will consider whether to propose amendments to rules under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 to enhance the disclosures that registrants are required to make about compensation and other corporate governance matters, and to clarify certain of the rules governing proxy solicitations.

Item 3: The Commission will consider whether to approve the proposed rule change, as modified by Amendment No. 4, filed by the New York Stock Exchange, Inc. to amend NYSE Rule 452 and corresponding Listed Company Manual Section 402.08 to eliminate broker discretionary voting for the election of directors, except for companies registered under the Investment Company Act of 1940, and to codify two previously published interpretations that do not permit broker discretionary voting for material amendments to investment advisory contracts with an investment company.

The open meeting will be held at the SEC's headquarters at 100 F Street NE in Washington, DC, and 10:00AM.  The meeting is open to the public on a first come first served basis. The meeting will also be webcast live via a link on the SEC's website,  Given the role executive compensation incentives are said to have played in causing our current economic downturn, all of these proposals are of great interest, and the details of which will bear close scrutiny by a wide range of constituencies. 

The full text of the SEC's notice under the Sunshine Act of the July 1, 2009 open meeting is available at: