What: All Issues : Government Checks on Corporate Power : General : Requiring publicly traded companies to allow shareholders to cast non-binding votes on compensation packages for top executives beginning in 2009 (H.R. 1257)/Rep. Patrick McHenry (R-N.C.) amendment to require pension plans to reveal to their beneficiaries how they voted (2007 house Roll Call 239)
 Who: All Members : New York, District 2 : King, Pete
[POW!]
 
Requiring publicly traded companies to allow shareholders to cast non-binding votes on compensation packages for top executives beginning in 2009 (H.R. 1257)/Rep. Patrick McHenry (R-N.C.) amendment to require pension plans to reveal to their beneficiaries how they voted
house Roll Call 239     Apr 20, 2007
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Progressive Result
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This vote was on an amendment to a bill requiring publicly traded companies to allow shareholders a say in the compensation packages of top executives. Proposed by Rep. Patrick McHenry (R-N.C.), the amendment would have required that pension plans, which own large blocks of publicly traded stock, disclose to their plan members how they voted on executive compensation packages of the companies they invest in.

The legislation McHenry was seeking to amend would require that all publicly traded corporations conduct annual nonbinding advisory votes on the compensation of their executives beginning in 2009. The impetus for the bill was a growing concern among lawmakers as well as many economists that the widening discrepancy between pay for executives and working- and middle-class Americans was harmful for both the economy and social mobility.

"I think it is important that the managers of those pension funds disclose to the actual owners of those retirement funds, those pension funds, how their managers cast their votes," McHenry said. "Union leadership or pension fund leadership should have to inform their shareholders how they cast votes on their behalf. I think that is a matter of openness and transparency."

McHenry pointed out that mutual funds already have to disclose their votes on such matters to their members.

Frank actually agreed with McHenry on principle, but said he opposed the amendment because he didn't want to limit the disclosure requirement to pension funds, and because the scope of this legislation (and House rules regarding the relevancy requirement for amendments) limited the scope of amendments that could be attached, a broader requirement could not have been attached to this bill.

"I agree on the principle that a fiduciary's vote should have to be made public, but I wouldn't want to limit it only to pension funds," Frank said. He added that he would be happy to hold hearings on the subject.

Rep. Mel Watt (D-N.C.) added that "a broader amendment, were it germane to this bill, would probably be received favorably by all of us because we believe that fiduciaries in general should be reporting to the people that they are representing." But by limiting it only to pension plans, many other fiduciaries, including foundations and family trusts, would be excluded "that should have the same obligation," Watt said. "And singling out pension plans in this context I think is the wrong thing to do."

Democratic opposition to McHenry's amendment was near unanimous, with only one Democrat voting in support. Seventeen Republicans also voted against it. Thus, by a vote of 164 to 236, the House rejected an amendment to a bill requiring publicly traded companies to allow shareholders a say in the compensation packages of top executives that would have required pension funds to disclose how they voted to beneficiaries, and the legislation moved forward without the requirement.

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