Week of February 22: Possible New Proxy Laws

Publicly traded companies have important responsibilities. One of them is their proxy statement. Many are talking about proposed legislation that will require companies to adhere to new compensation laws. The movement is called "say-on-pay." The SEC is on track to begin following newly proposed laws in 2011, as long as they pass in Congress. Shareholders may be given advisory voting rights on compensation and the right to call special shareholder meetings. Other proposals require compensation committee independence and independent board chairs. Many new proposals have been passing in Congress as a result of the financial crisis. In my opinion, shareholders will be taking on an activist role in companies if these proposals become law. Shareholders should have a say in the compensation of management. I think everyone can agree that some of the bonuses managers have been taking are extremely large and just plain greedy. Shareholders should be entitled to recieve more company earnings, specifically in dividends, instead of them being passed out as bonuses. To read more about the "say-on-pay" measures, visit Lindorff's article.