House Approves Exec Comp Reform

July 31, 2009 ( - The U.S. House of Representatives on Friday approved a bill that would give shareholders a "say on pay" for top executives and ensure that they have a nonbinding, advisory vote on their company's pay practices.

A statement from the House Financial Services Committee said H.R. 3269, the Corporate and Financial Institution Compensation Fairness Act, was approved by a vote of 237-185. The Committee approved the measure on Wednesday (see Financial Services Committee Passes Exec Comp Measure ).

The bill would also require federal regulators to proscribe any inappropriate or imprudently risky compensation practices as part of solvency regulation of all financial institutions, and require financial firms to disclose any compensation structures that include incentive-based elements. Financial institutions with assets of less than $1 billion would be exempt from the bill’s incentive-based compensation disclosure requirements and related compensation structure oversight.

According to the Committee statement, the House also approved an amendment to H.R. 3269 that would strike language prohibiting clawbacks of executive compensation approved by shareholders and insert language prohibiting rules from allowing financial regulators to require recovery of incentive-based pay under arrangements in effect on the date of enactment.

A summary of the bill is here .