On January 25, 2011, the Securities and Exchange Commission adopted rules implementing Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act that grants shareholders of all public companies subject to the federal proxy rules the right to cast a non-binding advisory vote on executive compensation ("say-on-pay") and on the desired frequency of the say-on-pay votes ("say on-frequency"). The rules also address shareholder voting on golden parachute arrangements ("say-on-golden parachutes"). Although the required votes are nonbinding, the new regime is expected to have a significant impact on the relationship between management and shareholders. This Client Alert generally summarizes the final rules, highlights some differences between the adopted rules and the proposed rules, and outlines some current trends and practical considerations for companies to consider in preparing for the upcoming proxy season.
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