On January 25, by a 3-2 vote, the Securities and Exchange Commission adopted final rules requiring public companies to conduct separate shareholder advisory (nonbinding) votes on executive compensation and “golden parachute” compensation arrangements. These rules implement Section 14A of the Securities Exchange Act of 1934, enacted by the Dodd-Frank Wall Street Reform and Consumer Protection Act, and were adopted substantially as proposed on October 18, 2010, but with temporary relief for smaller reporting companies as discussed below.

The final rules impose four new requirements on public companies...