Say-On-Pay Bill Headed To House Floor

Say-On-Pay Bill Headed To House Floor - 7/27/2009

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HEADLINE NEWS:

Say-On-Pay Bill Headed To House Floor
Melissa Lipman

Securities Law 360. July 27, 2009
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EXCERPT: Legislation designed to tamp down on executive pay practices will probably reach the floor of the U.S. House of Representatives on Friday, according to House Financial Services Committee Chairman Rep. Barney Frank, D-Mass. The Financial Services Committee is set to begin marking up the legislation, titled "Corporate and Financial Institution Compensation Fairness Act of 2009," on Tuesday morning. Frank had originally vowed to mark up the bill a week earlier and a committee spokesman said on July 17 that the committee would look at the proposal on July 23. The chairman and 11 cosponsors introduced the bill - which would give shareholders an advisory vote on pay and provide federal regulators with more power to monitor risky compensation practices at all financial institutions - on July 21. Frank had released a discussion draft of the proposed law on July 17, a day after the U.S. Department of Treasury sent its own draft say-on-pay bill to Congress. The bill stems from similar say-on-pay legislation that the U.S. House of Representatives passed in 2007 and the administration's proposals. Frank has pointed to recent news reports that "some financial leaders yearn for the stirring return of yesteryear" in support of the proposed regulation. "It’s a question of empowering the shareholders to decide the appropriate level because it’s their money and giving regulators the ability to prevent compensation incentives that encourage taking inappropriate and excessive risk," Frank said in a statement. Frank's bill includes provisions to give shareholders the opportunity to cast advisory votes on compensation once a year and requires similar advisory votes on any golden parachute packages. It also echoes Treasury proposals seeking to increase the independence of compensation committees by giving the U.S. Securities and Exchange Commission power to regulate compensation committees charged with crafting and approving pay structures.

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