Financial Regulatory Forum

Governance reforms gain momentum with SEC pay-ratio disclosure proposal

By Bora Yagiz, Compliance Complete

NEW YORK, Oct. 9 (Thomson Reuters Accelus) - The U.S. Securities and Exchange Commission has proposed a rule that would make public companies disclose the pay gap between their top executive and the rest of the staff. But the divided 3-2 vote by which the proposal was advanced reflects the fierce debate between opponents to call it difficult and unnecessary, and advocates who say it provides a useful measurement for shareholders who want to rein in excessive compensation.

The proposed rule represents an attempt to alleviate the classical principal-agency problem, where the interest of the senior management may front-run that of the shareholders’ through overcompensation. It may also help regulators in furthering a growing effort to improve corporate risk-management practices. But the challenges of compiling useful figures may be daunting. (more…)

U.S. corporate shareholders gain more (frequent) say-on-pay (Westlaw Business)

Lloyd Blankfein (R) of Goldman Sachs and his wife Laura arrive for the state dinner hosted by U.S. President Barack Obama and first lady Michelle Obama for President of China Hu Jintao at the White House in Washington, January 19, 2011. REUTERS/Jonathan ErnstBy Erik Krusch

Feb. 2 (Westlaw Business) – Dodd-Frank and SEC-bolstered shareholders officially have a say on company pay. The SEC recently adopted rules requiring companies to hold say-on-pay, say-on-pay frequency, and golden parachute approval votes. Companies from Deere & Co. and Apple to Johnson Controls and Monsanto’s proxies are drafted, filed and poised to comply with the new rules. Companies and shareholders, however, still have plenty to hash out around the mechanics of executive compensation votes this proxy season. (more…)

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