WASHINGTON (Reuters) - U.S. senators said Wednesday it was time to make
corporate boards more accountable and give shareholders a say on executive
pay after the collapse or government bailouts of big financial companies.
The Obama administration and senior Democrats are pushing to reform how
companies are governed and executives are compensated as part of a broader
package to overhaul the country's financial regulation.
The Obama administration wants to give all shareholders an advisory vote
on executive pay. The House of Representatives is due to vote on the
so-called say-on-pay measure on Friday.
At a Senate Banking subcommittee hearing Wednesday on corporate
governance, at least one conservative Republican said U.S. corporate boards
ought to be more accountable.
"The board must be more involved and be a check on management,"
Republican Jim Bunning said.
Currently, the U.S. securities regulator does not have the power to
impose such rules. Mary Schapiro, chairman of the Securities and Exchange
Commission, has said she supports say-on-pay for all publicly-traded
The Senate panel examined ways to restore confidence in companies by
improving how they are governed. It also looked at a bill introduced by
Democrat Charles Schumer of New York, who wants to give shareholders more
"There are far too many cases recently where boards of directors, not
just regulators, were asleep at the wheel, or even complicit in practices
that caused great harm to our economy," Schumer said at the hearing.
Schumer's bill would give shareholders more influence over executive pay,
ban so-called staggered boards that prevent all corporate board seats from
being voted on at the same time.
It would require board directors receive at least 50 percent of the vote
in uncontested elections to remain on a board and would give shareholders an
easier and cheaper way to nominate board directors.
Some Democratic lawmakers have supported giving shareholders an easier
way to influence the composition of the board -- an issue also known as
proxy access and vehemently opposed by the business community.
Companies contend that giving shareholders proxy access would give
special interest groups too much say on the board and undermine management
Shareholder activists such as the Council of Institutional Investors say
it is their right to nominate board directors and on Wednesday urged
Congress to affirm the SEC's authority to adopt rules requiring companies to
"To ensure that owners of U.S. companies face no needless delays over the
effective date of this critical reform, the Council recommends congressional
affirmation of the SEC's authority," the council's executive director Ann
Yerger told the hearing.
After the Senate returns from its August recess, a comprehensive
financial regulation reform bill that includes corporate governance measures
will be introduced in the chamber, subcommittee chairman Jack Reed, a
Democrat, told reporters after the hearing.
Some Republicans voiced skepticism over government involvement in
corporate affairs. Bob Corker, a Tennessee Republican, said many factors led
to the financial crisis. "I hope that we don't create a similar problem by
over-legislating" how the corporate world works, he said.
(Reporting by Rachelle Younglai; Editing Bernard Orr)