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 that passed the House in 2007 and legislative proposals released yesterday by the Treasury Department. Mr. Frank also stated yesterday that the committee plans to mark up legislation on executive pay sometime next week. 

The discussion draft, titled "H.R. 3269, Corporate & Financial Institution Compensation Fairness Act of 2009" contains four major components listed below. A full text of the draft can be viewed by clicking here:

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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