§ 78n–1. Shareholder approval of executive compensation

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Not less frequently than once every 3 years, a proxy or consent or authorization for an annual or other meeting of the shareholders for which the proxy solicitation rules of the Commission require compensation disclosure shall include a separate resolution subject to shareholder vote to approve the compensation of executives, as disclosed pursuant to section 229.402 of title 17, Code of Federal Regulations, or any successor thereto. Not less frequently than once every 6 years, a proxy or consent or authorization for an annual or other meeting of the shareholders for which the proxy solicitation rules of the Commission require compensation disclosure shall include a separate resolution subject to shareholder vote to determine whether votes on the resolutions required under paragraph

(1)will occur every 1, 2, or 3 years. The proxy or consent or authorization for the first annual or other meeting of the shareholders occurring after the end of the 6-month period beginning on July 21, 2010 , shall include— the resolution described in paragraph (1); and a separate resolution subject to shareholder vote to determine whether votes on the resolutions required under paragraph

(1)will occur every 1, 2, or 3 years. In any proxy or consent solicitation material (the solicitation of which is subject to the rules of the Commission pursuant to subsection (a)) for a meeting of the shareholders occurring after the end of the 6-month period beginning on July 21, 2010 , at which shareholders are asked to approve an acquisition, merger, consolidation, or proposed sale or other disposition of all or substantially all the assets of an issuer, the person making such solicitation shall disclose in the proxy or consent solicitation material, in a clear and simple form in accordance with regulations to be promulgated by the Commission, any agreements or understandings that such person has with any named executive officers of such issuer (or of the acquiring issuer, if such issuer is not the acquiring issuer) concerning any type of compensation (whether present, deferred, or contingent) that is based on or otherwise relates to the acquisition, merger, consolidation, sale, or other disposition of all or substantially all of the assets of the issuer and the aggregate total of all such compensation that may (and the conditions upon which it may) be paid or become payable to or on behalf of such executive officer. Any proxy or consent or authorization relating to the proxy or consent solicitation material containing the disclosure required by paragraph

(1)shall include a separate resolution subject to shareholder vote to approve such agreements or understandings and compensation as disclosed, unless such agreements or understandings have been subject to a shareholder vote under subsection (a). The shareholder vote referred to in subsections

(a)and

(b)shall not be binding on the issuer or the board of directors of an issuer, and may not be construed— as overruling a decision by such issuer or board of directors; to create or imply any change to the fiduciary duties of such issuer or board of directors; to create or imply any additional fiduciary duties for such issuer or board of directors; or to restrict or limit the ability of shareholders to make proposals for inclusion in proxy materials related to executive compensation. Every institutional investment manager subject to section 78m(f) of this title shall report at least annually how it voted on any shareholder vote pursuant to subsections

(a)and (b), unless such vote is otherwise required to be reported publicly by rule or regulation of the Commission. The Commission may, by rule or order, exempt any other issuer or class of issuers from the requirement under subsection

(a)or (b). In determining whether to make an exemption under this subsection, the Commission shall take into account, among other considerations, whether the requirements under subsections

(a)and

(b)disproportionately burdens 1 small issuers. An emerging growth company shall be exempt from the requirements of subsections

(a)and (b). An issuer that was an emerging growth company but is no longer an emerging growth company shall include the first separate resolution described under subsection (a)(1) not later than the end of— in the case of an issuer that was an emerging growth company for less than 2 years after the date of first sale of common equity securities of the issuer pursuant to an effective registration statement under the Securities Act of 1933 [ 15 U.S.C. 77a et seq.], the 3-year period beginning on such date; and in the case of any other issuer, the 1-year period beginning on the date the issuer is no longer an emerging growth company. ( June 6, 1934, ch. 404 , title I, § 14A, as added Pub. L. 111–203, title IX, § 951 , July 21, 2010 , 124 Stat. 1899 ; amended Pub. L. 112–106, title I, § 102(a)(1) , Apr. 5, 2012 , 126 Stat. 308 .)

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