“House Votes to Permit Limits on Incentive Payments at Most Financial Services Companies”

Proposed legislation that has been approved by the full House of Representatives as part of the Corporate and Financial Institution Compensation Fairness Act of 2009 (H.R. 3269) will be of particular interest to financial services companies generally, especially those that are not otherwise subject to the proxy reporting rules of the Securities Exchange Act of 1934 (“Exchange Act”). In addition, those companies that have in the past granted, currently anticipate granting, or could consider in the future granting, compensatory stock options, should be aware of developments relating to the Ending Excessive Corporate Deductions for Stock Options Act (S. 1491), which could affect a company’s U.S. Federal income tax deductions in respect of such options. At this early stage, we cannot predict the ultimate outcome of either proposal. Nevertheless, given the intense focus that Washington continues to place on compensation matters, this Stroock Special Bulletin provides an overview of these proposed bills.