“Geithner and Schapiro Issue Statements on Compensation; Offer Clues on Proposed Legislation For All Public Companies”

In the wake of current economic circumstances, SEC chair Mary Schapiro indicated recently that “[n]ext month we will take up a broad package of corporate disclosure improvements, all designed to provide shareholders with important information about their company's key policies, procedures and practices, including compensation policies and incentive arrangements.” In addition, on June 10, Treasury Secretary Timothy Geithner promised legislation that will focus on “say on pay” and compensation committee independence. Although the impetus for this proposal likely stems from perceived weaknesses in compensation practices in the financial sector, it is important to note that these proposals would apply to all public companies. Secretary Geithner also outlined a set of broad principles that he hoped would “begin the process of bringing compensation practices more tightly in line with the interests of shareholders and reinforcing the stability of firms and the financial system.” This Stroock Special Bulletin highlights some of Ms. Schapiro’s recent public comments that may provide insight into current SEC thinking.