February 24, 2012
House Financial Services Committee: New Bill Would Exempt Newly Public Companies from Say-on-Pay for 5 Years
– Broc Romanek, CompensationStandards.com
Earlier this week, I blogged about a quartet of bills that the House Financial Services Committee approved. Ted Allen of ISS blogged yesterday that one of the bills would exempt newly public companies from holding say-on-pay votes for five years. A similar bill has been introduced in the Senate and has attracted bipartisan support.
The House bill, the “Reopening American Capital Markets to Emerging Growth Companies Act,” H.R. 3606, would create a new class of issuers, “emerging growth companies,” that would be exempt from the Dodd-Frank Act-mandated advisory votes for five years, or until they reach $1 billion in annual revenue or $700 million in public float. These companies also would be exempt from holding separate shareholder votes on “golden parachute” severance arrangements.
The bill would also excuse these emerging companies from Section 953(b) of Dodd-Frank, which would require disclosure of the ratio between a CEO’s total compensation and that of the firm’s median employee. These companies also would be spared from Sarbanes-Oxley’s requirement to hire an outside auditor to attest to the sufficiency of their internal financial controls.