U.S. Senator Christopher Dodd, who inserted the advisory vote provision into the economic stimulus bill, says he believes that hundreds of federally supported financial companies will be required to hold their first “say on pay” votes this year.

In a Feb. 20 letter to Securities and Exchange Commission chair Mary Schapiro, Dodd offered his views on the intent and application of the pay vote terms in the bill and asked the SEC to provide guidance to companies “as soon as practicable.” As chairman of the Banking Committee, Dodd played a key role in crafting the final details of the stimulus bill and has oversight authority over the SEC.

While the stimulus legislation did not set a precise date for the first compensation vote at the almost 400 firms that have participated in the federal Troubled Asset Relief Program (TARP), the law directed the SEC to prepare pay vote rules within a year, leading pay-vote proponents to conclude that the first votes would be held in 2010. However, Dodd, in his letter to Schapiro, said his view is that the legislation would mandate advisory votes at TARP firms that file both their preliminary and final proxy statements after Feb. 17, 2009—the date the legislation was signed.

Unlike the forward-reaching compensation rules proposed by the White House and the Treasury Department on Feb. 4, the pay vote provision in the stimulus legislation applies to past and future recipients of TARP assistance until they satisfy their obligations to the government.

If the SEC confirms that TARP firms must hold pay votes this year, that would represent a significant expansion of the practice and pave the way for a market-wide requirement. The agency may issue its guidance as early as this week.

News of Dodd’s letter has further emboldened the investor coalition that has filed more than 100 “say on pay” resolutions this season. On Feb. 24, proponents announced that two TARP recipients, American Express and Huntington Bancshares, had agreed to hold advisory votes, according to a press release from the Social Investment Forum. Overall, 18 U.S. companies—including Intel, Occidental Petroleum, and Hewlett-Packard--have endorsed this reform.

Proponents, who have submitted “say on pay” proposals at 12 other TARP firms this year, say they will press those companies to “to pledge to implement such votes as soon as possible.” Those issuers include: Bank of America, Goldman Sachs, Bank of New York, Morgan Stanley, Fifth Third Bancorp, American International Group, State Street, Wells Fargo, Capital One Financial, Zions Bancorp, South Financial Group, and CoBiz Financial.

“We are clearly moving toward ‘say on pay’ votes for all companies,” Tim Smith, a senior vice president at Walden Asset Management, said in the press release. “We believe that with SEC Chairwoman Schapiro’s and Commissioner [Elisse] Walter’s support, the strong two-to-one vote in the House in the last Congress, the movement by company leaders and the intense public sentiment on executive pay, it is virtually inevitable that companies will soon be required to implement this policy. The smart thing for corporations to do now is to step forward and voluntarily adopt the ‘say on pay’ advisory vote.”