Archive

Non-Binding Say-on-Pay Votes Part of Executive Compensation Reform Proposal

By Staff Report

Jun. 11, 2009

Non-binding say-on-pay shareholder votes would be required of all public companies under legislation proposed by the Obama administration Wednesday, June 10.


Also, the SEC would oversee corporate compensation committees to ensure their independence, according to a statement Wednesday by Treasury Secretary Timothy F. Geithner.


The legislation is part of broader executive compensation reform that would develop a standard to “reward innovation and prudent risk taking, without creating misaligned incentives,” the statement said.


“I want to be clear on what we are not doing. We are not capping pay. We are not setting forth precise prescriptions for how companies should set compensation, which can often be counterproductive,” Geithner said in the statement.


Principles of the reform outlined by Geithner are:


● Compensation plans should properly measure and reward performance.


● Compensation should be structured to account for the time horizon of risks.


● Compensation practices should be aligned with sound risk management.


● Golden parachutes and supplemental retirement packages should be re-examined to ensure they align the interests of executives and shareholders.


● The process of establishing compensation should promote transparency and accountability in the process of setting compensation.


“This financial crisis had many significant causes, but executive compensation practices were a contributing factor. Incentives for short-term gains overwhelmed the checks and balances meant to mitigate against the risk of excess leverage,” Geithner said in the statement.


Mary L Schapiro, SEC chairman, said in a statement Wednesday that the SEC “is actively considering a package of new proxy disclosure rules that will provide further sunshine on compensation decisions.”


They include how a company and its board manage risks, potential conflicts of interest by compensation consultants, and the experience and qualifications of director nominees to serve on the board and particular board committees.


John D. Heine, SEC spokesman, said a time frame for the SEC to propose the rules wasn’t available.



Filed by Barry B. Burr of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.


Workforce Management’s online news feed is now available via Twitter


About Workforce.com

blog workforce

We build robust scheduling & attendance software for businesses with 500+ frontline workers. With custom BI reporting and demand-driven scheduling, we help our customers reduce labor spend and increase profitability across their business. It's as simple as that.

Book a call
See the software

Related Articles

workforce blog

Employee Engagement

12 practical employee appreciation ideas for better engagement and retention

Summary Showing appreciation to your employees improves engagement and retention. There are 12 practica...

employee appreciation, engagement, HR, raccoons

workforce blog

Compliance

California fast food workers bill: why it’s more than meets the eye and how to prepare

Summary: California signs bill establishing a “fast food council” that has the power to raise the indus...

workforce blog

Employee Engagement

7 statistics on employee turnover in 2022 every HR manager should be aware of

Summary July 2022 saw 5.9 million total separations – More Replacing a full-time employee can cost up t...

employee retention, employee turnover