Shareholders of public companies would get advisory votes on executive compensation packages under legislation approved by a largely party-line 37-29 vote of the House Financial Services Committee yesterday.
Two Republicans on the committee, Rep. Paul Gillmor of Ohio and Rep. Walter Jones of North Carolina, voted with Democrats to approve the measure, which now moves to the full House.
The House could consider the Shareholder Vote on Executive Compensation Act bill as early as mid-April.
Authored by Financial Services Committee Chairman Barney Frank, D-Mass., the legislation would require publicly traded companies to submit advisory proxy votes to shareholders for non-binding votes on company executive pay practices beginning in 2009.
“We have taken an important step in giving shareholders the ability to express their approval or disapproval of pay packages for executives to run the corporations that they own,” Mr. Frank said in a press release.
The bill would not set limits on executive pay, but Rep. Frank has warned that if boards of directors ignore shareholder votes against their pay practices, Congress may move to give shareholders direct access to nominating directors as unions have called for.
A separate advisory vote would be required under the bill if companies award new “golden parachute” packages to executives.