The SEC on Tuesday gave shareholders the right to weigh in on pay packages for top executives.
SEC commissioners voted 3-2 to enact the say-on-pay measure that will subject compensation plans to non-binding shareholder votes as often as once a year. The proposal is under the agency's authority granted under the Dodd-Frank Act.
The SEC amended the rule proposed in October to “specify that a say-on-pay vote is required at least once every three years, beginning with the first annual shareholders' meeting taking place on or after Jan. 21,” Chairwoman Mary Schapiro said in comments prepared for the meeting. The rule will also require companies to disclose whether the votes are binding and how they have considered the results of previous votes, she said.
The rule will also require enhanced disclosure on so-called golden parachute payments for executives whose companies are acquired, subjecting them to shareholder advisory votes along with the takeover agreements.
Republican commissioners Kathleen Casey and Troy Paredes voted against the rule, saying smaller companies should have received a permanent exemption instead of the temporary exclusion that would force them to hold votes at annual meetings held after Jan. 21, 2013.