Unless the votes are going to be binding, why bother? We've already seen businesses ignore the non-binding votes and it's not clear how any future votes will differ. Politicians love this idea and the executives probably do as well. It gives the impression of change without actually delivering change. Bloomberg:
The U.S. Securities and Exchange Commission gave shareholders the right to weigh in on pay packages for top executives to increase scrutiny of compensation practices blamed for fueling Wall Street risk-taking.
SEC commissioners voted 3-2 today to enact the say-on-pay measure that will subject compensation plans to non-binding shareholder votes as often as once a year. The proposal is part of the agency’s rulemaking under the Dodd-Frank Act.
Dodd-Frank, the regulatory overhaul enacted in response to the 2008 credit crisis, directed the SEC to let investors vote their views on executive pay amid public furor over incentives that rewarded the kind of risky trading that toppled Lehman Brothers Holdings Inc. and Bear Stearns Cos.
