The U.S. Securities and Exchange Commission Tuesday adopted rules requiring issuers to hold ‘say-on-pay’ votes to allow shareholders to weigh in on executive compensation every three years.

The SEC’s new rules specify that say-on-pay advisory votes must occur at least once every three years beginning with the first annual shareholders’ meeting taking place after Jan. 21, 2011. Companies also are required to hold a “frequency” vote at least once every six years in order to allow shareholders to decide how often they would like to be presented with the say-on-pay vote.

Under the SEC’s new rules, companies also are required to provide additional disclosure regarding “golden parachute” compensation arrangements with certain executive officers in connection with merger transactions.

Earlier this month, the Ontario Securities Commission said that it would consider whether to require say-on-pay votes, among other shareholder democracy issues, too.

The SEC adopted a temporary exemption for smaller reporting companies (public float of less than $75 million). These companies are not required to conduct say-on-pay and frequency votes until annual meetings occurring on or after Jan. 21, 2013.

“I believe that this two-year deferral is a balanced and responsible way for the SEC to ensure that its rules do not disproportionately burden small issuers,” said SEC chairman, Mary Schapiro. “The two-year deferral period is designed to assist the commission in its consideration of these factors and will enable us to adjust the rule if appropriate before it applies to smaller issuers.”

IE