SEC Proposed Rule Would Allow Nonbinding Shareholder Vote on CEO Pay
The U.S. Securities and Exchange Commission moved this week to enact a provision that would give investors a voice in CEO pay at U.S. corporations.
Shareholders would get to vote on salaries and bonuses, though the vote would be nonbinding, Bloomberg reported. A company’s board of directors would always have the final say.
Congress included this “say on pay” provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act in response to the public outcry over bonuses paid to executives of Wall Street banks that received payouts. Under this proposal, companies would have to let shareholders vote on how often—every one, two or three years— they would like to cast say-on-pay votes.
In Britain, shareholders have long had the right to an annual vote on executive compensation, MarketWatch reported.
The SEC is seeking feedback from investors and companies on this proposal through Nov. 18.
