The Securities and Exchange Commission recently adopted final rules implementing the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act relating to shareholder approval of executive compensation and golden parachute compensation. Under the new rules, issuers must provide a shareholder advisory vote to approve their executive compensation, also known as “say-on-pay” (or “SOP”), at least once every three years and a shareholder advisory vote to approve the frequency of SOP votes at least once every six years. Issuers must also provide enhanced disclosure regarding merger-related compensation arrangements, also known as “golden parachutes,” and provide a shareholder advisory vote to approve certain golden parachute arrangements in proxy statements related to the approval of mergers.

Large public companies are required to comply with the SOP and SOP frequency requirements starting with their first annual shareholder meeting that occurs on or after January 21, 2011. Smaller reporting companies must include an SOP vote and SOP frequency vote in their first annual meeting occurring on or after January 21, 2013. The requirements to disclose and provide a shareholder vote on golden parachute compensation arrangements will apply to all proxy solicitations filed on or after April 25, 2011.