---
kind: "section"
citation: "15 U.S.C. § 78n–1"
title: "15"
title_heading: "Commerce and Trade"
number: "78n–1"
heading: "Shareholder approval of executive compensation"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/15/78n-1"
units:
  - "Chapter 2B — Securities Exchanges"
---

# §78n–1. Shareholder approval of executive compensation

- (a) **Separate resolution required—**
  - (1) **In general—** 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](/usc/15/78c.md?p=a-15) 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.
  - (2) **Frequency of vote—** 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](/usc/15/78c.md?p=a-15) require compensation disclosure shall include a separate resolution subject to shareholder vote to determine whether votes on the resolutions required under [paragraph (1)](#a-1) will occur every 1, 2, or 3 years.
  - (3) **Effective date—** 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—
    - (A) the resolution described in [paragraph (1)](#a-1); and
    - (B) a separate resolution subject to shareholder vote to determine whether votes on the resolutions required under [paragraph (1)](#a-1) will occur every 1, 2, or 3 years.
- (b) **Shareholder approval of golden parachute compensation—**
  - (1) **Disclosure—** In any proxy or consent solicitation material (the solicitation of which is subject to the rules of the [Commission](/usc/15/78c.md?p=a-15) pursuant to [subsection (a)](#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](/usc/15/78c.md?p=a-8), the [person](/usc/15/78c.md?p=a-9) 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](/usc/15/78c.md?p=a-15), any [agreements](/usc/15/7a.md?p=2) or understandings that such [person](/usc/15/78c.md?p=a-9) has with any named executive officers of such [issuer](/usc/15/78c.md?p=a-8) (or of the acquiring [issuer](/usc/15/78c.md?p=a-8), if such [issuer](/usc/15/78c.md?p=a-8) is not the acquiring [issuer](/usc/15/78c.md?p=a-8)) 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](/usc/15/78c.md?p=a-8) 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.
  - (2) **Shareholder approval—** Any proxy or consent or authorization relating to the proxy or consent solicitation material containing the disclosure required by [paragraph (1)](#b-1) shall include a separate resolution subject to shareholder vote to approve such [agreements](/usc/15/7a.md?p=2) or understandings and compensation as disclosed, unless such [agreements](/usc/15/7a.md?p=2) or understandings have been subject to a shareholder vote under [subsection (a)](#a).
- (c) **Rule of construction—** The shareholder vote referred to in subsections [(a)](#a) and [(b)](#b) shall not be binding on the [issuer](/usc/15/78c.md?p=a-8) or the [board](/usc/15/78c.md?p=a-73) of [directors](/usc/15/78c.md?p=a-7) of an [issuer](/usc/15/78c.md?p=a-8), and may not be construed—
  - (1) as overruling a decision by such [issuer](/usc/15/78c.md?p=a-8) or [board](/usc/15/78c.md?p=a-73) of [directors](/usc/15/78c.md?p=a-7);
  - (2) to create or imply any change to the fiduciary duties of such [issuer](/usc/15/78c.md?p=a-8) or [board](/usc/15/78c.md?p=a-73) of [directors](/usc/15/78c.md?p=a-7);
  - (3) to create or imply any additional fiduciary duties for such [issuer](/usc/15/78c.md?p=a-8) or [board](/usc/15/78c.md?p=a-73) of [directors](/usc/15/78c.md?p=a-7); or
  - (4) to restrict or limit the ability of shareholders to make proposals for inclusion in proxy materials related to executive compensation.
- (d) **Disclosure of votes—** Every institutional investment manager subject to [section 78m(f) of this title](/usc/15/78m.md?p=f) shall report at least annually how it voted on any shareholder vote pursuant to subsections [(a)](#a) and [(b)](#b), unless such vote is otherwise required to be reported publicly by rule or regulation of the [Commission](/usc/15/78c.md?p=a-15).
- (e) **Exemption—**
  - (1) **In general—** The [Commission](/usc/15/78c.md?p=a-15) may, by rule or order, exempt any other [issuer](/usc/15/78c.md?p=a-8) or class of [issuers](/usc/15/78c.md?p=a-8) from the requirement under subsection [(a)](#a) or [(b)](#b). In determining whether to make an exemption under this subsection, the [Commission](/usc/15/78c.md?p=a-15) shall take into account, among other considerations, whether the requirements under subsections [(a)](#a) and [(b)](#b) disproportionately burdens[^1] small [issuers](/usc/15/78c.md?p=a-8).
  - (2) **Treatment of emerging growth companies—**
    - (A) **In general—** An [emerging growth company](/usc/15/78c.md?p=a-80) shall be exempt from the requirements of subsections [(a)](#a) and [(b)](#b).
    - (B) **Compliance after termination of emerging growth company treatment—** An [issuer](/usc/15/78c.md?p=a-8) that was an [emerging growth company](/usc/15/78c.md?p=a-80) but is no longer an [emerging growth company](/usc/15/78c.md?p=a-80) shall include the first separate resolution described under [subsection (a)(1)](#a-1) not later than the end of—
      - (i) in the case of an [issuer](/usc/15/78c.md?p=a-8) that was an [emerging growth company](/usc/15/78c.md?p=a-80) for less than 2 years after the date of first sale of common [equity securities](/usc/15/78c.md?p=a-11) of the [issuer](/usc/15/78c.md?p=a-8) pursuant to an effective registration statement under the Securities Act of 1933 [[15 U.S.C. 77a](/usc/15/77a.md) et seq.], the 3-year period beginning on such date; and
      - (ii) in the case of any other [issuer](/usc/15/78c.md?p=a-8), the 1-year period beginning on the date the [issuer](/usc/15/78c.md?p=a-8) is no longer an [emerging growth company](/usc/15/78c.md?p=a-80).

## Footnotes

[^1]: So in original. Probably should be “burden”.

## Source credit

(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.)

## Notes

### Editorial Notes

### References in Text

The Securities Act of 1933, referred to in subsec. (e)(2)(B)(i), is title I of act May 27, 1933, ch. 38, 48 Stat. 74, which is classified generally to subchapter I (§ 77a et seq.) of chapter 2A of this title. For complete classification of this Act to the Code, see section 77a of this title and Tables.

### Amendments

2012—Subsec. (e). Pub. L. 112–106 designated existing provisions as par. (1), inserted heading, substituted “any other issuer” for “an issuer”, and added par. (2).

### Statutory Notes and Related Subsidiaries

### Effective Date

Section effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as a note under section 5301 of Title 12, Banks and Banking.