On January 12, the Securities and Exchange Commission adopted final rules that require companies which have received financial assistance under the Troubled Asset Relief Program (TARP) to include in their proxy statement a separate shareholder vote on executive compensation as required to be disclosed under Item 402 of Regulation S-K. Under the TARP provisions, the vote is nonbinding. The proposals to these amendments were previously reported in the July 2, 2009, edition of Corporate and Financial Weekly Digest.
In response to comments received on the proposed rules, the SEC has also amended Rule 14a-6(a) under the Exchange Act to clarify that TARP recipients will not be required to file a preliminary proxy statement because of inclusion of the required separate shareholder vote on executive compensation. Also, new Rule 14a-20 under the Exchange Act has been modified from the proposal to clarify requirements for TARP recipients that are smaller reporting companies. The separate TARP shareholder vote does not require compensation discussion and analysis (CD&A) by a smaller reporting company eligible to omit CD&A under the scaled disclosure provisions of Item 402 of Regulation S-K.
The final rules are effective 30 days after publication in the Federal Register.
Click here for the Final Rule Release No. 34-61335.