Alert February 24, 2009

Senator Dodd Provides Views on the Certification and ‘Say on Pay’ Provisions of the ARRA of 2009

As a follow up to the executive compensation restrictions discussed in the February 17, 2009 Alert, Senate Banking Committee Chairman Christopher Dodd wrote a letter to the SEC on February 20th providing his views on the certification and “say on pay” provisions of the American Recovery and Reinvestment Act of 2009 (the “ARRA”).  Senator Dodd sponsored the amendment to the ARRA which added retroactive executive compensation requirement for all recipients of TARP funds.  In the letter, Senator Dodd stated that he believes that the “say on pay” provisions, which require an annual non-binding shareholder vote on executive compensation, “apply only to preliminary or definitive proxy statements filed with the [SEC] after February 17, 2009, but would not apply to proxies filed earlier.”  Senator Dodd further stated that the requirement that CEOs and CFOs annually certify compliance with the executive compensation and corporate governance standards provided by the ARRA is not effective until the Treasury has established such standards.  The SEC is advising financial institutions that have concerns regarding how these changes may impact planned proxy statement printing and distribution to contact their assigned assistant director in the SEC’s Corporation Finance Division.