Then next week the administration will roll out its overall financial regulatory reform measures.
On background, an Obama administration official outlined the powers to be given to the new "special master" for compensation at firms receiving government aid. This master will have the power to reject plans from companies that he deems to have excessive or inappropriate salary, as well as the job of reviewing compensation plans for the top 100 salaried employees.
Also, per the official, the administration will propose legislation that will require members of compensation committees to be independent from management and answerable only to the compensation committee and its independent advisers and legal counsel. This, they say, would give the SEC the authority to strengthen the independence of compensation committees similar to the way that Congress previously strengthened the independence of audit committees.
Finally, the official says the administration will voice support for "say on pay" legislation, as President Obama has done in the past, that would empower the SEC to require non-binding annual say-on-pay votes for all public companies. Say-on-pay, the administration believes, will improve directors' accountability to the owners of the company by giving shareholders a way to express their views on pay decisions, and will allow boards and shareholders to work together to design compensation that gives executives strong incentives to maximize long-term firm value.