Legislation giving shareholders of public companies an advisory vote on executive compensation plans was approved by the House of Representatives today by a vote of 269-134.
The legislation, introduced by House Financial Services Committee Chairman Barney Frank (D-Mass.), also would give shareholders an advisory vote if a company gives executives new “golden parachute” benefits during negotiations to buy or sell a company.
Mr. Frank points to the U.K., where such advisory votes are allowed, saying that such votes will strengthen corporate governance in the U.S.
He said in a statement that the legislation “builds on the Securities and Exchange Commission’s executive pay disclosure rules,” by requiring companies to include in their annual proxies to investors the opportunity to vote on the company’s executive pay plans.
Mr. Frank has also told labor groups that if companies fail to heed disapproving votes by shareholders of their plans, he will take further steps to rein in excessive executive pay plans.
No similar legislation has yet been introduced in the Senate.