April 20, 2007 – 1:38 p.m.

House Passes Bill Allowing Shareholders to Vote on Executive Pay

Shareholders of publicly traded companies would be allowed to cast nonbinding votes on compensation packages for top executives under legislation the House passed 269-134 today.

The Senate, as yet, has no companion bill, and the White House opposes the measure (HR 1257).

Supporters highlighted the great increase in total compensation for top corporate executives in recent years and the growing disparity with workers’ salaries. They said shareholders should have a guaranteed mechanism for expressing their views of the contracts that in total can be worth tens of millions of dollars or more.

“Some might think this is unnecessary and, in a better world, it would be. But there is not now any clear-cut, uniform legal right for the shareholders to get such a vote,” Financial Services Chairman Barney Frank, D-Mass. said in opening the debate earlier in the week.

The White House and many House Republicans argued that the bill represented an unnecessary intrusion of the federal government into corporate affairs.

Critics also argued that executive-compensation regulations put in place last year by the Securities and Exchange Commission should be given more time to take effect.

“We are attempting to legislate in this area before there is any evidence to suggest that the current SEC robust disclosure requirements are not working,” said Rep. Michael N. Castle, R-Del.

 

 

James C. Little

International President ,

Transport Workers Union of America. AFL-CIO