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"Say on Pay" Proposals

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For the referenced draft bill, see

For the referenced Treasury proposal of similar legislation, see


U.S. House Committee on Financial Services, July 17, 2009 press release



July 17, 2009                                                 



Frank Circulates Discussion Draft on Executive Compensation


Washington, DC – Today, Chairman Barney Frank (D-MA) circulated a “discussion draft” on executive compensation to members of the Financial Services Committee.  The draft is based on “Say-on-Pay” legislation that passed the House in 2007 and legislative proposals released yesterday by the Treasury Department. Mr. Frank also stated yesterday that the committee plans to mark up legislation on executive pay sometime next week. 


The discussion draft, titled the “Corporate and Financial Institution Compensation Fairness Act of 2009,” contains four major components listed below. A full text of the draft can be viewed by clicking here:


I.                   Say-on-Pay


Applies to all public companies

Substantially similar to 2007 House passed bill

Requires annual shareholder advisory vote on compensation

Requires shareholder advisory vote on golden parachutes


II.                Independent Compensation Committee Requirement


Applies to all public companies

Requires compensation committees be made up of independent directors

Requires that compensation consultants satisfy independence criteria established by the SEC


III.             Incentive Based Compensation Disclosure Requirements


Applies to all “financial institutions”

    • Definition specifically includes banks, bank holding companies, broker-dealers, credit unions & investment advisors
    • Definition also includes any institution identified as appropriate during joint rulemaking by the relevant Federal financial regulators


Requires all “financial institutions” to disclose compensation structures that include any incentive based elements


IV.              Compensation Standards for Financial Institutions


Applies to all “financial institutions”

Requires federal regulators to proscribe inappropriate or imprudently risky compensation practices as part of solvency regulation








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