In a surprising reversal, the Securities and Exchange Commission has rejected a request for “no action” relief on a proposal calling for the reform of pay practices and a limit to senior executive compensation at companies receiving federal aid under the Capital Purchase Program of the Troubled Assets Relief Program (TARP).

The decision may be reflective of a change in approach to such proposals under new SEC chairwoman Mary Schapiro.

The reversal is being lauded by SEC watchers. “TARP is one of the most significant policy issues and it’s good to see the SEC affirming shareholders’ right to have a say on such issues without insisting on word-smithing of fairly straight-forward proposals,” said attorney Cornish Hitchcock, who represents labor funds in no action proceedings.

The decision also is significant given that 15 of 22 similar proposal filings tracked by RiskMetrics have been challenged at the SEC. Three have thus far been omitted.

Birmingham, Ala.-based Regions Financial had petitioned the SEC to reject the proposal on the grounds it was “vague and misleading,” had been “substantially implemented,” and was comprised of multiple proposals, in violation of SEC Rule 14a-8(c). Pointing to an earlier decision by the commission to exclude a similar proposal at SunTrust Banks, Regions relied primarily on the vague and misleading argument noting the proposal appears to impose “no limitation on the duration of the specified reforms.” As it normally does, commission staff did not elaborate on why they were rejecting the company’s arguments.