The SEC Issues Proposed Rules on Dodd-Frank's Executive Compensation Shareholder Approval Rules
By Stephen H. Harris & J. Mark Poerio
On October 18, the SEC issued proposed rules ("Proposed Rules") implementing the executive compensation and golden parachute shareholder approval requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"). Basically public companies must solicit a separate nonbinding shareholder vote on certain executive compensation matters in their proxy statements ("Proxies") for annual meetings taking place on or after January 21, 2011.
We encourage public companies to immediately consider two actions - first, joining us in the submission of comments to the SEC on the Proposed Rules and the Dodd-Frank Act's other executive compensation provisions. More on that appears at the end of our summary. Second, public companies should be carefully considering (1) how to refine their 2011 CD&As and tabular disclosures to defuse issues that could trigger shareholder or proxy advisory firm criticism, and (2) what, if any, changes to golden parachutes should be made in 2011 so as to secure shareholder approval.