SEC Proposes Increased Business Transparency, Investor Involvement

By Laura Woodhead – Talk Radio News Service

The U.S. Securities and Exchange Commission voted “yes” on Wednesday to propose amendments that will increase shareholder involvement in setting executive pay, and broaden the transparency of information they receive about their companies’ risk profile.

The amendments would allow shareholders of companies that are receiving, or will receive, money from the Troubled Asset Relief Program (TARP) to view information concerning the companies’ compensation policies to risk, the qualifications of the directors, executives and nominees, the executives role in risk management and the potential for conflicts of interest arising from compensation of consultants.

SEC Chairwoman Mary Schapiro stressed that the measures would provide for “better disclosure, not simply additional disclosure.”

The commission also narrowly approved a proposed amendment that would restrict broker proxy voting in executive and director elections. Under the current rules, brokers are allowed to proxy vote for shareholders even if the shareholders do not express a preference towards a particular candidate.

“These are vital and sorely needed efforts” Commissioner Luis Aguilar said of the proposed changes.

Commissioner Troy Paredes, who opposed the proposed amendment to proxy voting, stressed that it was imperative that an “effective retail shareholder education program” be implemented to help the shareholders with the increased disclosure.

The proposals are open for comment until August 17th.