The Securities and Exchange Commission (SEC), the top US financial regulator, yesterday approved new rules giving shareholders the right to decide upon stock compensation plans at companies listed on US exchanges.

Under the rules, shareholders get direct control over the allocation of lucrative stock option packages received by executives and directors.

In addition, the new rules mandate that brokers owning stock for clients can vote on equity compensation plans only if they are instructed to do so by the owner of the shares.

"These changes are part of a broad movement by our markets and the SEC to enhance the corporate governance practices of the companies traded [on US markets]," according to Mr William Donaldson, chairman of the SEC.

The New York Stock Exchange and the Nasdaq last year proposed these additions to their listing standards in an effort to restore investor confidence in US markets.

Yesterday's approval of these rules has come too late for this year's shareholder meetings and proxy season. - (Financial Times Service)