Corporate Governance

Preparing for Mandatory Say-on-Pay

By Harvard Law School Program on Corporate Governance

With enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, mandatory say-on-pay has become federal law. [1] Say-on-pay under the Reform Act requires significant preparation on the part of issuers and their boards of directors and is one step in what we anticipate will be a long and ongoing dialogue with investors about compensation. The requirement is effective for shareholder meetings held on or after January 21, 2011.

The Reform Act and Say-on-Pay

Say-on-pay refers to a shareholder advisory vote on the compensation of an issuer?s named executive officers. Say-on-pay has been a focus of shareholder advocates and the frequent subject of shareholder proposals on executive compensation for several years. [2] Prior to the Reform Act, a number of legislative proposals included a say-on-pay requirement and, in 2009, mandatory say-on-pay became the rule for participants in the Troubled Asset Relief Program.

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Full post as published by The Harvard Law School Corporate Governance Blog on August 08, 2010 (boomark / email).