The Securities and Exchange Commission voted 3-2 Tuesday (1/25) to let shareholders vote in the future on the compensation of corporate bosses. The two Republican commissioners dissented, saying it would place too much of a burden on small public companies.
Under the new rules, resulting from the Dodd-Frank financial reform act passed last year, most public companies will have to let shareholders cast non-binding votes on executive compensation at their annual meetings beginning this year. The voting covers pay, bonuses and exit packages – so-called “golden parachutes.” New votes will be required at least once every three years.
Public companies with a stock float below $75 million don’t have to implement the new “say-for-pay” votes until 2013. The GOP members of the SEC had wanted a permanent exemption for small companies.
For public companies with floats of $75 million or more the first vote on executive compensation must take place at the first annual meeting occurring after January 21, 2011, which was last Friday.
RBR-TVBR observation: Step up and cast your vote. What is Farid Suleman worth, anyway? We can guess how Geoffrey Raynor would answer that question. But since lots of institutional investors tend to vote with the recommendations of the board of directors – even in cases when it is fairly obvious that they are voting against their own self interest as shareholders – we wonder whether this new rule will have any real impact on CEO compensation.