The SEC voted unanimously in favor of putting out a rule that would require all public companies to disclose more about executive compensation and corporate governance that might affect their risk management.
"The turmoil in the markets during the past 18 months has demonstrated the importance of ensuring that activities that materially contribute to a company's risk profile are fully disclosed to investors," SEC chairman Mary Schapiro said in introducing the measures.
The commission also gave initial approval "say on pay" rule that would give shareholders in firms that receive federal bailout funds a voice on executive compensation.
The rule was mandated by Congress for firms that receive money from the Troubled Asset Relief Program. Shareholders must be allowed a vote on executive pay, though it may be nonbinding.
The broader transparency measure would require companies to disclose the relationship between a company's overall compensation policies and its risk profile, as well as compensation consultant conflicts of interests.
It would also require better disclosure about board candidates' particular experience, qualifications, attributes or skills qualifying them to be a director.
And it calls for better disclosure about why a board has chosen its particular leadership structure, and a description of the board's risk management role.
A third measure prohibiting broker-dealers from automatically voting proxies for their clients in board elections at New York Stock Exchange firms was more contentious, splitting 3-2 along party lines in the commission vote.
Schapiro and the Democratic commissioners favored the measure because it prevents a management slate from getting an automatic majority, while Republican commissioners said it risks disenfranchising small investors who expect their brokers to vote for them.
All the measures must be submitted for public comment before gaining final approval.
By Darrell Delamaide for our sister site, FinReg21