Say-On-Pay Bill Passes House Along Party Lines

Say-On-Pay Bill Passes House Along Party Lines - 7/31/2009

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HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

HEADLINE NEWS:

Say-On-Pay Bill Passes House Along Party Lines
Ben James

Securities Law 360. July 31, 2009
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EXCERPT: The U.S. House of Representatives approved a bill Friday afternoon that would give shareholders an advisory vote on executive compensation and allow regulators to ban incentive pay arrangements that could have serious negative effects on economic conditions. The Corporate and Financial Institution Compensation Act of 2009, also known as H.R. 3269, passed by a vote of 237-185 that went largely along party lines, with only two Republicans voting in favor of the bill and 16 Democrats voting against it. The legislation, which follows uproar over executive compensation practices at companies that took federal bailout money, was introduced by House Financial Services Committee Chairman Barney Frank, D-Mass., and seeks to amend the Securities Exchange Act of 1934. The bill may be folded into a larger regulatory reform package for the U.S. Senate to consider in the fall, House Financial Services Committee spokesman Steven Adamske told Law360. Other issues tackled in that package will include the regulation of derivatives and creating a systemic regulator for financial markets, Adamske added. The say-on-pay component of H.R. 3269 would apply to public companies and require an annual shareholder advisory vote on executive compensation and so-called golden parachutes. The bill would also require annual reporting of the say-on-pay and golden parachute votes by all institutional investors, unless those votes are otherwise required to be publicly reported by the U.S. Securities and Exchange Commission. The bill also gives regulators a green light to prohibit any incentive-based pay arrangement that could threaten the safety and soundness of covered financial institutions or have serious adverse effects of economic conditions or financial stability. In addition, all financial institutions with more than $1 billion in assets would have to disclose compensation structures with incentive based elements.

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