U.S. securities regulators were poised to adopt say-on-pay rules on Tuesday aimed at empowering shareholders to cast non-binding votes on executive pay, and to propose new rules designed to help regulators police hedge funds for systemic risk.
The Securities and Exchange Commission rules are the latest moves by the agency to implement key provisions in the Dodd-Frank Wall Street reform law.
The say-on-pay rules come after many shareholders complained of lavish pay packages, even during the financial crisis, particularly at large Wall Street banks.
Although the shareholder say-on-pay votes are non-binding, companies want to avoid the embarrassment of a no vote. Some companies have already moved to adopt say-on-pay votes.
The SEC's final rules, which need a majority of commissioners to sign off before they can be finalized, would require companies to give their shareholders a chance to vote on executive compensation and also to decide the frequency of a say-on-pay vote.
Shareholders would also get a chance to vote on golden parachute compensation arrangements in connection with a merger or acquisition.
The final rules would grant a phase-in period for smaller publicly listed companies. They would have until January 21, 2013 to adopt say-on-pay votes.
That may not sit well with Republicans on the SEC and many other small business advocates who have called for exempting small firms, saying they had nothing to do with the crisis and cannot even afford to pay their executives lavishly.
The SEC will also consider on Tuesday proposing rules to let regulators collect key information from advisers to hedge funds and other private pools of capital.
That information includes their use of leverage and the credit risk the funds may be exposed to by their trading partners.
The information would help the Financial Stability Oversight Council, a council of regulators created under Dodd-Frank, to police for systemic risk.
The reporting requirements in the proposal will vary depending on whether an adviser manages assets of a large fund or a small fund.
Also on Tuesday, the SEC is planning to propose new rules designed to protect high-net worth individuals who may not be sophisticated enough to make higher-risk investments.
(Reporting by Sarah N. Lynch; Editing by Tim Dobbyn)