Friday, July 31: H.R. 3269 – Corporate and Financial Institution Compensation Fairness Act

The bill contains four major components:

(1) “say-on-pay” provisions that would apply to all public companies and require an annual shareholder advisory vote on compensation and a shareholder vote on so-called “golden parachute” clauses;

(2) independent compensation committees comprised of independent directors for all public companies and a requirement that compensation consultants satisfy independence criteria established by the SEC;

(3) incentive-based compensation disclosure requirements that would apply to all financial institutions, defined to include banks, bank holding companies, broker-dealers, credit unions, investment advisers and any institution identified as appropriate during joint rulemaking by the relevant Federal financial regulators; and

(4) compensation standards for all financial institutions that would require Federal regulators to proscribe inappropriate or imprudently risky compensation practices as part of solvency regulation.

The following amendments will be considered:

Frank Amendment – Removes the bill’s provision that Rep. Price had included in markup which prohibits clawbacks of executive compensation approved by shareholders. The amendment instead, prohibits financial regulatory rules from requiring companies to recover incentive-based pay.

PASSED 242-178 – See Roll Call Vote

Garrett Amendment in the Nature of a Substitute – Strikes all provisions of the bill and instead allows shareholders to vote on holding a non-binding shareholder vote every three years on executive compensation.

If two-thirds of a company’s shareholders do not vote in favor of such a triennial vote, then no vote would occur.

The amendment contains similar language to the bill’s provisions regarding compensation committees, but allows state law to supersede such provisions.

The substitute does not include the bill’s provisions dealing with incentive-based compensation.

FAILED 179-244 – See Roll Call Vote

Republican Motion to Recommitt

The motion would recommit H.R. 3269, the Corporate and Financial Institution Compensation Fairness Act, back to the House Financial Services Committee with an amendment.

The amendment would require the disclosure of activities to influence non-binding shareholder votes on compensation required by the underlying bill.  The amendment prohibits a shareholder’s vote from being counted if the shareholder has spent more than a de minimis amount of money on activities to influence the vote of other shareholders, unless the shareholder discloses the activities to the Securities and Exchange Commission (SEC).  The SEC would be charged with collecting information on individuals, or organizations, that influence the shareholder vote, such as who is spending the money, what they are spending it on, and how much they are spending to influence the vote of other shareholders.

FAILED 178-244 – See Roll Call Vote

VOTE ON FINAL PASSAGE: PASSED 237-185 – See Roll Call Vote

Published in: on July 31, 2009 at 5:48 pm  Leave a Comment