U.S. Rep. Barney Frank sees success ahead for his 'say-on-pay' bill
There’s at least one piece of unfinished business that U.S. Rep. Barney Frank expects to resolve once the new congressional session begins in early 2009: the passage of a bill giving shareholders some say over top executives’ pay packages.
Frank’s “say-on-pay” bill passed overwhelmingly in the House in April 2007 but it has been stalled in the Senate.
In a meeting with The Patriot Ledger’s editorial board on Monday, Frank said he plans to bring the bill back to the House floor for a successful vote early next year. The Newton Democrat also expects the bill has enough support that it will pass in the Senate this time around.
The measure would require all publicly traded companies to run the pay packages for their top five executives past their shareholders with a nonbinding, advisory vote every year.
Frank, the chairman of the House Financial Services Committee, said the bill would cause CEOs and their allies on corporate boards to be more thoughtful about handing out big pay packages. He said he expects many executives would be embarrassed to go against the wishes of the majority of their companies’ shareholders.
Some activist shareholders have pressed companies to approve their own internal “say-on-pay” measures in the past few years but a relatively small number of companies have adopted them so far.
Nell Minow, editor of research firm The Corporate Library, said Frank’s bill is a key corporate governance reform – particularly if it can be coupled with changes at the state level or to exchange listing rules that can give shareholders more control over installing and removing corporate board members.
She noted that the two major presidential candidates – Sen. Barack Obama and Sen. John McCain – support Frank’s bill, and Obama had introduced the bill in the Senate.
Minow said the public’s frustration with Wall Street firms over the recent credit market collapse should help push Frank’s bill forward next year. “I think it’s a modest corrective to a system where the market has failed very badly,” she said. “There’s a sense of outrage at this point about this current situation that I have not seen before with any financial meltdown.”
Jon Chesto may be reached firstname.lastname@example.org.