Sen. Charles Schumer is planning to introduce legislation which would mandate that public corporations give shareholders an advisory vote on executive compensation.
Sen. Charles Schumer is planning to introduce legislation which would mandate that public corporations give shareholders an advisory vote on executive compensation.
The so-called say-on-pay provision is one of several requirements outlined in the New York Democrat’s proposed Shareholder Bill of Rights Act of 2009, according to a letter seeking support that he sent to colleagues in the Senate Friday.
In addition to the executive compensation advisory vote, the act would require shareholder approval for executive “golden parachutes.”
It would also give shareholders access to the corporate proxy process to nominate members to the board.
All directors would be subject to annual votes from shareholders and would be required to receive a majority of votes in order to stay on a board.
The bill would also mandate that the duties of chief executive and chairman be separate and require corporations to create a separate committee to oversee risk management.
It is too early to predict the proposal’s success, said Tim Smith, senior vice president at Walden Asset Management, a division of Boston Trust and Investment Management Co. and a leader of a national coalition of investors advocating for say on pay.
“Certainly the time is right,” he said. “There is a lot of public sentiment in favor of support for these kinds of reforms.”
Shareholders at many companies are voting on say-on-pay resolutions during this proxy season.
“Say on pay is very popular right now,” Mr. Smith said. “At a number of companies, the majority of shareholders have voted for it.”
Whether Mr. Schumer’s proposal is introduced and passed, “we are quite confident that the say-on-pay piece will pass sometime this year,” Mr. Smith said.
