The House Financial Services Committee approved a bill 40 to 28 on Tuesday that was intended to better align executive compensation to performance, taking the first action on a piece of the Obama administration's financial regulatory reform plan.
The bill would give shareholders a nonbinding vote on compensation, golden parachutes and requires compensation committees to be made up of independent directors.
The committee approved changes to give regulators more discretion and to provide some exemptions for smaller institutions.
The bill was modified to give the Securities and Exchange Commission power to exempt smaller issuers from the say-on-pay requirements.
It was also altered to make clear that financial companies that do not have incentive-based payment arrangements are not required to make disclosures about such arrangements.
The committee also adopted an amendment from Rep. Jeb Hensarling, R-Texas, that would provide an exemption for institutions of $1 billion in assets and under from the bill's incentive compensation restrictions.
A similar compensation bill passed the House in 2007 but died in the Senate. This bill is expected to sail through the House before lawmakers adjourn at the end of the week.
The Senate is expected to roll any such provision into its comprehensive regulatory reform bill. Debate on the Senate bill is not expected to heat up until later this year.