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For Immediate Release:
Contact:
March 1,
2007 Steve
Adamske (202) 225-7141
Heather
Wong (202) 225-3314
Frank Introduces
Legislation to Allow Shareholders to
Vote on Executive Pay
Congressional hearing to
be held on March 8
Washington, DC--House Financial Services Committee Chairman
Barney Frank, joined by 21 other Members of Congress, today introduced
legislation to require public companies to include in their annual proxies a
non-binding advisory shareholder vote on their executive pay plans. The
bill, H.R. 1257, the “Shareholder Vote on Executive Compensation Act” will
not set any limits on pay, but will
ensure that shareholders have an opportunity to
give their approval or disapproval on the company’s executive pay
practices. The bill also contains a separate advisory vote if a company
gives a new, not yet disclosed, “golden parachute” while simultaneously
negotiating to buy or sell a company. Advisory votes on compensation have
been successfully used in the United Kingdom and was recently
adopted voluntarily by the company AFLAC.
"I do
not understand those who argue that the people who make up our stock markets
are collectively very wise, but at the same time are somehow incapable of
rendering a coherent opinion of what they should pay those they employ to
run the corporations that they own,” said Chairman Frank.
Specifically, the legislation builds on the Securities and Exchange
Commission’s (SEC) executive pay disclosure rules to require that public
companies include in their annual proxy to investors the opportunity to vote
on the company’s executive pay plans.
Last
year, the SEC took a good step forward on compensation by requiring that
public companies significantly improve their executive compensation
disclosures to shareholders. Frank believes that disclosure is important,
but incomplete. The Shareholder Vote on Executive Compensation Act would
ensure that shareholders have a say on their company’s executive
compensation disclosures without micromanaging the business.
The
House Financial Services Committee will hear from experts, academics and
advocates on both sides of this issue at the hearing on the legislation on
March 8, 2007, at 10:00 a.m. in the Rayburn House Office Building, room
2128.
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