Area Leaders Oppose Say-on-Pay
Washington area business leaders and compensation analysts today expressed opposition to an Obama administration proposal designed to give shareholders more influence over pay for executives of all publicly traded companies.
The proposal is aimed at reining in excessive compensation of corporate executives.
"I don't think this is going to succeed," said Shub Debgupta, senior director of the Corporate Executive Board. Debgupta objected to a "say-on-pay" proposal that would empower shareholders to vote annually on whether an executive pay package should be approved. Companies would be required to forward the vote tallies to the Securities and Exchange Commission.
"Historically, when shareholders have a say, it hasn't been a very strong voice one way or the other," Debgupta added. "Shareholders, while owners, know very little about the inner workings and risks and issues of the company."
James C. Dinegar, president and chief executive of the Greater Washington Board of Trade, said he opposes federal interference in corporate matters. "I understand the concerns and hope that the shareholders and corporate governance boards do weigh in with appropriate measures," Dinegar said. "The government is not the group I'd like to see setting executive pay level."
The prospect of more government involvement in corporate matters also worried Barbara B. Lang, president and chief executive of the D.C. Chamber of Commerce. "I think this is a very slippery slope," Lang said. "I would be concerned about that much government control and oversight in a for-profit firm."
Tim Bartl, senior vice president and general counsel of the Disrict-based Center on Executive Compensation, said a recent survey showed that a majority of institutional shareholders don't want to have a say on pay.
"This would mean that shareholders would have to analyze 30 to 40 pages of disclosures if they're going to make a reasoned determination on an executive's pay package," Bartl said. "If you own 300 companies -- 40 pages times 300 is a lot of reading."
A second proposal would empower the SEC to ensure that compensation committees at companies act independently in setting executive pay. Members of these committees would not be able to take any fees from their respective firms other than what they make for serving on the panels. Attorneys or consultants that help members in their work must be hired by and report to the committee rather than the chief executive of a firm.
--V. Dion Haynes
Please email us to report offensive comments.
Posted by: greenispeace | June 10, 2009 6:41 PM
The comments to this entry are closed.