Frank: Exec Pay
Legislation Coming Soon
By ELLEN SIMON 02.09.07, 6:47 PM ET
Legislation requiring shareholders to ratify executive pay packages
could be introduced as early as next week, Rep. Barney Frank, D-Mass.,
chairman of the House Financial Services Committee, said in an
interview Tuesday with The Associated Press.
The House bill could pass as soon as April, Frank said. The
Financial Services Committee has planned hearings on executive pay for
It is likely the proposed legislation would not give shareholders a
direct vote on pay, said Frank's spokesman Steve Adamske. Instead, it
would give shareholders a chance to cast a nonbinding confidence or
no-confidence vote on reported executive pay, letting them either
ratify or say no to the pay package an executive has already received.
Such votes are required in the United Kingdom, Australia and
Sweden. Advocates say the pay packages are rarely voted down, but the
knowledge they must be voted on has helped keep executive compensation
in check in the countries that require a vote.
Aflac Inc., the supplemental life and health insurer, last
Wednesday became the first U.S. company to say it would submit its
executive pay packages to a vote.
The American Federation of State, County and Municipal Employees
has submitted "say on pay" proposals, asking for a nonbinding
yes-or-no shareholder vote on pay packages at companies including
Citigroup Inc., Wachovia Corp., Ingersoll-Rand Co., Merrill Lynch &
Co. and Countrywide Financial Corp.
About 10 companies, including Pfizer, Intel Corp., Bristol-Myers
Squibb Co., Schering-Plough Corp., American International Group Inc.,
JPMorgan Chase & Co. and Colgate-Palmolive have formed a working group
with AFSCME and Walden Asset Management to discuss shareholder
approval of pay packages. Walden Asset Management, which manages about
$1.5 billion, advertises itself as an investment company that works
for social change.
Frank said other issues he plans to tackle include subprime
mortgages and income inequality.
On subprime mortgages, or home loans to people with blemished or
limited credit histories, he said the committee would address
"no-document" mortgages, where the borrower doesn't have to prove
income, but added, "I don't think this is mostly driven by sneaky
borrowers lying about how much money they have; it's driven by
unscrupulous lenders taking advantage of unsophisticated people."
Frank also said lawmakers could work to narrow income inequality by
strengthening the role of unions, passing a higher minimum wage,
adopting universal health care and changing the tax code, particularly
provisions that benefit primarily wealthy tax payers, such as capital
gains and dividend tax cuts.
Copyright 2006 Associated Press. All rights reserved.