Although this could open up an additional channel of communication between shareholders and directors, there already are more effective ways for shareholders to influence executive pay such as the new SEC disclosure rules and shareholders' right to elect directors.
(PRWEB) March 14, 2007
The U.S. House of Representatives Committee on Financial Services held a hearing on March 8 about legislation that would allow shareholders to vote on the compensation packages of corporate executives. The bill, H.R. 1257, was introduced by the Committee's chairman, Rep. Barney Frank (D-MA) last week and is being called "The Shareholder Vote on Executive Compensation Act."
WorldatWork staff attended the hearing and submitted a statement on behalf of the association which became part of the hearing record. The association's statement made three primary points: (1) there are already a number of opportunities for shareholder input to companies and adding a "non-binding" vote on compensation doesn't add anything, (2) compensation packages are designed with a multitude of complex internal and external factors that are best thought through by professionals, independent company boards of directors and independent consultants, and (3) the 2006-enacted Securities and Exchange Commission (SEC) disclosure requirements are only being implemented now and should be given a chance to prove they are inadequate before enacting more disclosure and regulatory requirements.
"The legislation proposed by Congressman Frank envisions all companies holding a non-binding shareholder vote on the compensation plan of executives," explained Don Lindner, executive compensation practice leader for non-partisan WorldatWork. "Although this could open up an additional channel of communication between shareholders and directors, there already are more effective ways for shareholders to influence executive pay such as the new SEC disclosure rules and shareholders' right to elect directors."
The Total Rewards Association
WorldatWork (http://www.worldatwork.org) is an international association of human resources professionals focused on attracting, motivating and retaining employees. Founded in 1955, WorldatWork provides practitioners with knowledge leadership to effectively implement total rewards -- compensation, benefits, work-life, performance and recognition, development and career opportunities -- by connecting employee engagement to business performance. WorldatWork supports its 30,000 members and customers in 30 countries with thought leadership, education, publications, research and certification.
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