As widely expected (read: leaked), the US Securities and Exchange Commission on Wednesday voted in favour of seeking feedback from investors and bankers on whether companies who benefited from government aid should be obliged to give shareholders a direct vote on executive compensation.
The proposed rule is quite limited in scope, since it would only apply to banks that haven’t yet repaid the funds they received under the Tarp (i.e, it would not apply to Goldman, JP Morgan and Morgan Stanley).
Those companies that haven’t repaid Tarp funds by the time they issue proxy statements to shareholders next year would have to give investors a non-binding vote on compensation.
That’s right, it’s less “say”, more “suggestion”, so it’s not quite the comprehensive overhaul of executive compensation for which some have lobbied.
SEC Chairman Mary Schapiro described the vote as just one of a number of proposals aimed at “enhancing the quality of the system through which shareholders exercise their franchise.”
Related links:
“Is that plain old common sense hovering over Washington DC?” – Lex
Treasury statement on executive pay – Treasury
US ‘pay tsar’ to vet executive pay – FT