The SEC has issued an investor bulletin explaining how the new say on pay rules work. Here's the executive summary:
- Say-on-Pay Votes. The new rule requires public companies subject to the proxy rules to provide their shareholders with an advisory vote on the compensation of the most highly compensated executives. Say- on-Pay votes must be held at least once every three years.
- Frequency Votes. These companies also are required to provide their shareholders with an advisory vote on how often they would like to be presented with the Say- on-Pay votes - every year, every second year, or every third year.
- Golden Parachute Disclosures and Votes. These companies are required to disclose compensation arrangements and understandings with those executive officers in connection with an acquisition or merger. In certain circumstances, these companies also are required to conduct a shareholder advisory vote to approve the golden parachute compensation arrangements.
I still think this is a lousy idea. See Say on Pay: An Unjustified Incursion on Director Authority.
