Friday, July 24, 2009
Life will be getting a little harder for corporate executives and boards if the Securities and Exchange Commission adopts new rules governing compensation and other corporate procedures. Although the changes are not considered “tide-changing” in the words of one legal analyst, the SEC rules may cause companies to cut back on the use of incentive-based compensation and instead rely on larger base salaries and other perks to reward executives.
The new rules would also require greater disclosure of executive compensation policies, and corporate boards would have to explain to federal regulators how those policies affect corporate risk-taking with company resources. Board personnel also would have to show the government what qualifications are being used to choose new directors.
The changes follow other reforms recently passed by the SEC that included ending broker-dealer voting in board elections.
-Noel Brinkerhoff
Proxy Disclosure and Solicitation Enhancements (Securities and Exchange Commission) (PDF)
Comments on Proposed Rule: Shareholder Approval of Executive Compensation of TARP Recipients (Securities and Exchange Commission)
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