The House has approved legislation that will give shareholders a greater say over executive compensation, the first step in Democrats’ planned regulatory overhaul of the U.S. financial system. The Wall Street Journal reported the measure passed by a vote of 237-185, which follows a report showing that the largest banks continued to give outsized bonuses during the worst of the financial crisis last year. The bill’s fate remains uncertain. The House has previously passed similar measures not taken up by the Senate. The legislation would also require federal regulators to implement rules aimed at preventing financial firms from adopting compensation systems that encourage excessive risk-taking. Treasury Secretary Timothy Geithner called the measure a “positive step” and said overhauling executive-compensation practices was an “essential part” of the administration’s legislative agenda. The legislation, if enacted, could affect public companies of all sizes. Timothy Bartl, general counsel of the Center on Executive Compensation, whose advisory board includes officials from the largest U.S. firms, including McDonalds Corp. and IBM, said the measure “would substitute an annual vote for meaningful engagement with shareholders.” However, Business Roundtable, an association of chief executive officers, issued a statement saying it is “deeply disappointed” in the outcome of the House vote. “Federal intervention and mandated actions are no substitute for the individual relationships of shareholders and boards of directors. Once again, the search for a one-size-fits-all solution to executive compensation has taken us down the wrong path, potentially at the expense of long-term economic growth and job creation,” said John J. Castellani, president of the Business Roundtable.
House Approves Say on Pay
The House has previously passed similar measures not taken up by the Senate.
August 3, 2009