A Reuters news report said the bill from Senator Charles Schumer (D-New York) also includes a provision requiring separating a publicly-traded company’s CEO from the chairman position. Schumer told Reuters that his measure will likely be part of a larger legislative package of financial regulatory reforms, which he hopes can be passed by the end of the year.
The measure would also give shareholders “proxy access,” meaning they would have an advisory vote on executive compensation packages, and would require that corporate boards establish risk committees. The bill would require companies to obtain shareholder approval for the pay packages given to executives when they leave a company.
“During this recession, the leadership at some of the nation’s most renowned companies took too many risks and too much in salary, while their shareholders had too little say,” Schumer said during a news conference, according to Reuters. “This legislation will give stockholders the ability to apply the emergency brakes the next time the company management appears to be heading off a cliff.”
Schumer’s bill would ban so-called “staggered” boards that prevent all corporate board seats from being voted on at the same time. It also requires that board directors receive at least 50% of the vote in uncontested elections to remain on the board.
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