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. Adam Putnam (R-Fla.) amendment that would exempt companies that tie executive pay to performance (2007 house Roll Call 241)
 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. Adam Putnam (R-Fla.) amendment that would exempt companies that tie executive pay to performance
house Roll Call 241     Apr 20, 2007
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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. Adam Putnam (R-Fla.), the amendment would have exempted companies that tie executive pay to performance.

The legislation Putnam 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.

Putnam's amendment would have exempted companies from having to conduct a shareholder vote on executive pay if the majority of the executives' compensation were subject to revocation for individual poor performance of that of the company. This kind of pay structure is known as nonqualified, deferred compensation. "Those that have poor performance forfeit some of their compensation," Putnam said.

Putnam said he offered the amendment because Democrats were using as a rationale for the bill the presupposition that pay for top executives is disconnected from their performance. "I would argue that if you believe that, then you should support this amendment that focuses on performance and encourages greater accountability," he added. "My amendment gets to the heart of shareholder frustration, which is that if a CEO fails to fulfill their fiduciary duties, then they should be held accountable."

Frank rose to opposed the amendment on grounds that "it intrudes the Congress into the internal pay decisions of the corporation."

"We are strictly, scrupulously, completely neutral as to how the corporations pay their CEOs and others. We simply say that the market should work, that these shareholders should decide," Frank continued. In Frank's words, the underlying legislation, which he drafted, would create a "uniform, legally enforceable right" for shareholders to have a direct say in the compensation of the corporation's top executives.

Democratic opposition to Putnam's amendment was near unanimous, with only one Democrat voting in support. Twenty-three Republicans also voted against it. Thus, by a vote of 160 to 240, 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 exempted corporations that provide the majority of each of their top executive's pay in the form of nonqualified, differed compensation, and the legislation moved forward without the exemption.

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Key: Y=Yea, N=Nay, W=Win, L=Loss