New regulations adopted by the Securities and Exchange Commission will require companies to hold nonbinding shareholder votes on executive pay packages. Shareholders will thus have readier access to a method of getting the full attention of a company’s board of directors.

The so-called “say on pay” regulations came because of the Dodd-Frank financial reform law that passed last year with support from shareholders’ rights groups and labor unions, but without the support of many corporations.

Around nine thousand companies will have to comply with the new rules, but about 1,500 of them will be exempt for two years because they have less than seventy-five million dollars in outstanding shares available for trading in public markets and also file proxy statements.

Some small companies may receive a permanent exemption at some point.

While it is the case that companies do not have to accept the results of any “say on pay” votes, they will have to closely consider approving pay that will displease shareholders.

The regulations, passed by a 3-2 vote, require the affected companies to hold nonbinding shareholder votes on executive pay packages at least once every three years, beginning at the first annual shareholder meeting to occur on or after Jan. 21 of 2011.

“Say on pay” gained support in the United States with the financial crisis, and the widespread opinion that executive pay packages contributed to dangerous risks being taken by Wall Street firms.

So far, San Diego shareholders’ rights attorneys have noted that most companies that are affected have recommended that shareholders vote on pay packages once every three years. That is the least-frequent option.

Source: Wall Street Journal “SEC, in Split Vote, Adopts ‘Say on Pay’ Rule” 1/25/2011