WASHINGTON (Reuters) - Shareholders could get more influence over
executive pay and the composition of boards of directors under U.S.
legislation unveiled on Tuesday.
Sen. Charles Schumer, a prominent Democrat on the Senate Banking
Committee, said he will introduce on Tuesday a "Shareholder Bill of Rights"
that would give shareholders a "say on pay" and would require that the chief
executive job be separate from the chairman position at U.S. publicly traded
He said the bill will likely be part of a larger legislative package of
financial regulatory reforms, which he hopes can be passed by the end of the
Schumer's measure would also give shareholders "proxy access," meaning
they would have an advisory vote on executive compensation packages, and
would require that corporate boards establish risk committees.
"During this recession, the leadership at some of the nation's most
renowned companies took too many risks and too much in salary, while their
shareholders had too little say," Schumer said during a news conference.
"This legislation will give stockholders the ability to apply the
emergency brakes the next time the company management appears to be heading
off a cliff."
Shareholders are demanding corporate governance changes in the wake of a
financial crisis that has flooded billions of dollars of taxpayer money into
corporations such as insurer American International Group Inc and investment
bank Bear Stearns.
Lawmakers and some executives have said greed drove companies to take
excessive risk with an eye toward short-term profits.
Schumer's bill would ban so-called "staggered" boards that prevent all
corporate board seats from being voted on at the same time. It also requires
that board directors receive at least 50 percent of the vote in uncontested
elections to remain on the board.
The bill instructs the U.S. Securities and Exchange Commission to issue
rules that would grant shareholders access to the corporate proxy for
nominations to the board of directors. To make a nomination, shareholders
would have to have owned at least 1 percent of a public company's shares for
at least two years.
The SEC will consider proposals on Wednesday to make it easier and
cheaper for shareholders to influence the composition of a corporate board.
Regarding pay, the bill would require companies to obtain shareholder
approval for executives' so-called golden parachutes, or the hefty pay
packages given to executives when they leave the company.
Executive pay has also received intense scrutiny lately, with Treasury
Timothy Geithner pledging to reform pay practices across the financial
industry. Executive compensation reform is also expected to be part of a
broad reform package the Obama administration will propose to Congress in
the coming weeks.
(Reporting by Karey Wutkowski; Editing by Andre Grenon)