The Department of Treasury’s (“Treasury”) release of an interim final rule (official publication date June 15, 2009) pursuant to sections 101(a)(1), 101(c)(5), and 111 of the Emergency Economic Stabilization Act of 2008 (“EESA”), as amended by the American Recovery and Reinvestment Act of 2009 (“ARRA”), provides much needed and anticipated regulatory guidance on the executive compensation restrictions that apply to those entities receiving financial assistance under the Troubled Asset Relief Program (“TARP”).
Notably, the new regulations add several new executive compensation restrictions/requirements and have an immediate effective date.
Treasury will solicit comments for 60 days on the new regulations. This summary is subject to change pending Treasury’s receipt of comments and finalization of the regulations.
Last week, Treasury also issued several “fact” sheets describing the way in which executive compensation will be determined for public companies, including TARP participants. The proposals outline forthcoming legislation requiring mandatory shareholder “say on pay” votes with respect to executive compensation as well as authorization for the Securities and Exchange Commission to require compensation committees to meet heightened independence requirements.