Friday, July 17, 2009
On July 16 Treasury announced that it delivered draft "say-on-pay" legislation to Congress that would require all publicly traded companies to give shareholders a non-binding vote on executive compensation packages. This legislation would require a non-binding annual shareholder vote on compensation for all public companies. All public companies will be required to include a non-binding shareholder vote on executive compensation as disclosed in the proxy for any annual meeting held after December 15, 2009.
Compensation subject to the vote includes pay packages for senior executive officers. The disclosures that would be subject to the say-on-pay vote include tables summarizing salary, bonuses, stock and option awards and total compensation for senior executive officers, as well as summaries of golden parachute and pension compensation and a narrative explanation of the board's compensation decisions. The Treasury proposal is heavily influenced by the U.K. experience.