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International News Title: Say on Pay compensation vote puts CEOs on the spot Shareholders can now vote on the salaries of executives leading publicly traded businesses. The Dodd-Frank Act reforming the financial industry included the Say on Pay guideline, which was okayed Wed by the Federal Trade Commission. The Say on Pay vote is nonbinding, however analysts expect the guideline might have a profound effect on the behavior and performance of chief executives. This is supposed to keep individuals from getting massive payday loans to pay for the top executive's paydays. Source for this article - New Say on Pay rule gives shareholders vote on CEO compensation by MoneyBlogNewz. Paying CEO depending on traders Because of the executive payment packages occurring along with the rank-and-file salaries, the Dodd-Frank Act was passed in 2010 with the Say on Pay rule proposed. Around January 21, the first annual shareholders’ meeting is held. The top-level salaries are voted on once every three years be shareholders with this. Starting in Jan 2013 companies with outstanding stock worth $75 million or less will even be subject to the Say on Pay guideline. The Say on Pay guideline was approved by a 3-2 vote by the commission along partisan lines. Republican commissioners voted no, saying that smaller companies ought to be permanently exempt. CEO getting excessive pay The Say on Pay provision was included within the Dodd-Frank Act in response to public anger about a chasm between executive and employee pay that has multiplied tenfold within the last few decades. Several of the public policy groups explained that a CEO of a publicly traded company makes a ton more than the average worker on salary. It is about 300 times more in fact. Just a generation ago that was much different. There was about 30 times more made by a CEO. Corporate executives are free to ignore the vote, however it's likely they will avoid the embarrassment of investors openly expressing their negative opinions about them. New things for public companies within the U.S. Another reason for the Say on Pay provision is to give some more influence to traders. That way, the corporate executive has some control. The guideline makes it so annual reports have to be made by the business. In these, the response to shareholder votes has to be included. If they choose to disregard the vote, they have to explain why. This is the way the U.K. has been doing things for year. In fact, there has been a vote on executive pay for quite some time. Before a vote happens, the executive pay package is negotiated, which the United States system will likely soon reflect. Citations Market Watch http:// http://marketwatch.com/story/sec-approves-investor-say-on-ceo-pay-2011-01-25?pagenumber=2 BNET http:// http://bnet.com/blog/business-news/investors-get-say-on-pay-what-will-they-do-with-it/3965 Daily Finance http:// http://dailyfinance.com/story/investing/sec-gives-investors-a-vote-on-executive-pay-golden-parachutes/19814998/ Post Comment Private Reply Ignore Thread |
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