House OKs Bill over Non-Binding Shareholder Vote on Executive Pay

April 20, 2007 ( - The U.S. House of Representatives voted on Friday to give shareholders a say in executives' compensation, giving them a way to help keep the pay packages of executives in check and possibly quelling increasing criticism over exorbitant rewards for those in the corporate upper echelons.

class=”times” style=”MARGIN: auto 0in”> In a 269 to 134 vote, the House voted to give shareholders a non-binding vote on executives’ compensation packages and  a separate advisory vote on pay packages being negotiated for top executives in connection with mergers or other similar transactions.

class=”times” style=”MARGIN: auto 0in”> The   Shareholder Vote on Executive Compensation Act was introduced by House Financial Services Committee Chairman Barney Frank, D-Massachusetts) in March (See  Frank Introduces Executive Pay Bill ).The legislation was described as building on the Securities and Exchange Commission’s (SEC) executive pay disclosure rules to require that public companies include in their annual proxy to investors the opportunity to vote on the company’s executive pay plans (See  New Executive Compensation Disclosure Rules Take Effect ). 

class=”times” style=”MARGIN: auto 0in”> The bill will move next to the Senate Banking Committee.

class=”times” style=”MARGIN: auto 0in”> Not all shareholders want more influence over executives’ compensation. Attempts at greater shareholder say were ill-fated in April at Morgan Stanley and the Bank of New York (See  Shareholders Say Nay to Pay Say ).