June 19, 2009
Last week, Treasury Secretary Timothy Geithner announced that the Obama Administration will work with Congress to pass "say-on-pay" legislation to give shareholders an advisory vote on executive compensation, as well as legislation to impose requirements on compensation committees intended to strengthen their independence. Recently, other significant pieces of legislation have been introduced in Congress that, among other things, would require: expanded proxy disclosure of compensation-related performance targets; an independent chairman of the board of directors; a majority vote of shareholders in uncontested director elections; and stockholder access to the proxy statement for director elections. The House Financial Services Committee has held a hearing on the link between excessive risk in compensation structures and the current financial crisis. Senior management and directors at public companies should follow these developments closely. Given the level of Congressional interest, and the current political and economic climate, it is likely that we will see elements of these bills become enacted, with potential for the most significant governance reform since the Sarbanes-Oxley Act of 2002. The attached Weil Briefing summarizes these initiatives.
Please follow this link to access the Briefing.