U.S. companies will have to disclose their compensation practices and board members' qualifications under rules adopted by the Securities and Exchange Commission on Wednesday.
The SEC voted 4-1 to change how companies govern themselves and provide more information to investors, who have criticized lax boards and lavish executive compensation.
"Good corporate governance is a system in which those who manage a company ... are effectively held accountable for their decisions and performance," SEC Chairman Mary Schapiro said at an open meeting.
Amid the worst financial crisis in decades, shareholders have voiced frustration with how companies performed and executives are paid.
Under the SEC's new rules, companies would be required to tell shareholders more about pay policies, board members' qualifications and why they chose a certain leadership structure.
Companies would have to disclose how diversity is considered in identifying director nominees. They would also be required to disclose fees paid to compensation consultants when they help determine how much an executive or director should be paid.
Over the past year, shareholders have taken a more active role in how their companies are governed, pushing for say on pay and seeking an easier way to influence the composition of the corporate board.
© 2017 Thomson/Reuters. All rights reserved.