On October 18, 2010, the Securities and Exchange Commission (SEC) proposed amendments to its rules under the Securities Exchange Act that would implement the requirements of Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) relating to shareholder approval of executive compensation and “golden parachute” compensation arrangements.

Section 951 of the Dodd-Frank Act amended the Exchange Act by adding new Section 14A. Section 14A(a)(1) requires that, not less frequently than every 3 years, a company’s proxy statement for an annual or other meeting of shareholders for which SEC rules require compensation disclosure must include a separate resolution subject to a non-binding shareholder vote to approve the compensation of named executive officers. This advisory vote on executive compensation is generally referred to as “say-on-pay.”

Section 951 also added Section 14A(a)(2) to the Exchange Act, requiring that a company’s proxy statement include, not less frequently than once every 6 years, a separate resolution subject to a non-binding shareholder vote to determine whether the say-on-pay vote required by Section 14A(a)(1) will occur every 1, 2, or 3 years. This advisory vote is generally referred to as “say-when-onpay.”

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