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)/On passage (2007 house Roll Call 244)
 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)/On passage
house Roll Call 244     Apr 20, 2007
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This was the final vote on a bill to require publicly traded companies to allow shareholders a say in the compensation packages of top executives. The legislation would require that corporations conduct annual nonbinding advisory votes on the compensation of their executives beginning in 2009.

Although the board of directors would not have to abide by the vote, the architect of the bill, Financial Services Chairman Barney Frank (D-Mass.), said shareholders should nonetheless have an opportunity to express their views. The legislation would also require companies to disclose executive severance pay plans in the event of an acquisition, merger, consolidation or proposed sale.

The bill was prompted by increased attention to the multimillion-dollar compensation packages awarded to top corporate executives, a practice that particularly enrages its critics when the company's performance has been poor.

Republican opponents of the legislation maintained that it was an unnecessary government intrusion into private business, and many worried aloud that the bill would serve as a stepping-stone for binding shareholder votes in the future. Many Republican critics also said Congress should observe the result of regulations put in place last year by the Securities and Exchange Commission requiring greater corporate disclosure of compensation packages before considering legislation.

The bill, Rep. Pete Sessions (R-Texas) said, "constitutes an unnecessary and unwarranted federal intrusion into the free enterprise system and the private sector."

"The legislation that the Democrat majority has brought to the House today would create a new federal mandate on publicly held companies," Sessions continued, "but does so in a half-hearted way that would have absolutely no practical impact on its purported goal of improving disclosure and addressing 'excessive' executive compensation."

Frank responded that "letting people who own the company vote on information that the SEC has required the company to put forward as to whether or not they approve or disapprove that that's what the people they hired should be paid is not at all intrusive."

"We think it has had a reasonable effect in moderating corporate excesses," Frank added.

Despite the vocal Republican opposition, 55 Republicans ended up voting for the legislation, joining all but five Democrats in passing the bill. Thus, on a vote of 269 to 134, the House approved a measure requiring publicly traded companies to allow shareholders to cast non-binding votes on compensation packages for top executives beginning in 2009.

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