US say-on-pay proposals 'will be beneficial'

An executive compensation expert has said US companies will ultimately be able to use the so-called say-on-pay rules to their advantage.

In an article for Forbes, Donald Delves of consulting firm Delves Group admitted the new requirement for organisations to hold non-binding shareholder votes on their remuneration proposals is set to create "considerable challenges for corporate leaders".

However, he also claimed company boards will benefit from shareholder intervention in the long run, as the say-on-pay system will help them to develop stronger links between executive pay and performance.

"Those links will strengthen because increased exposure means increased accountability," Mr Delves commented.

Earlier this week, the Securities and Exchange Commission (SEC) published a set of proposals for the say-on-pay votes, due to come into effect at the first annual meetings taking place after January 21st 2011.

The provision is one of approximately 100 new rules the SEC is required to issue as part of the Dodd-Frank Act.