[StBernard] Frank Circulates Discussion Draft on Executive Compensation

[Westley Annis]

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
<http://financialservices.house.gov/press110/press042007.shtml>  that passed
the House in 2007 and legislative proposals released yesterday by the
Treasury Department. Mr. Frank also stated yesterday
<http://www.house.gov/apps/list/press/financialsvcs_dem/pr_071609.shtml>
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,"
<http://www.house.gov/apps/list/press/financialsvcs_dem/comp_001_xml.pdf>
contains four major components listed below. A full text of the draft can be
viewed by clicking here
<http://www.house.gov/apps/list/press/financialsvcs_dem/comp_001_xml.pdf> :

 

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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