[Congressional Record Volume 153, Number 63 (Thursday, April 19, 2007)]
[Extensions of Remarks]
[Page E788]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             SHAREHOLDER VOTE ON EXECUTIVE COMPENSATION ACT

                                 ______
                                 

                               speech of

                       HON. JANICE D. SCHAKOWSKY

                              of illinois

                    in the house of representatives

                       Wednesday, April 18, 2007

  Ms. SCHAKOWSKY. Mr. Chairman, I rise today in strong support of H.R. 
1257, the Shareholder Vote on Executive Compensation Act, which ensures 
that shareholders have a say in corporate executive compensation plans 
and golden parachute packages for executives who are negotiating the 
purchase or sale of the company.
  For too long, executive compensation has been determined behind 
closed boardroom doors. The results have been that executives' pay has 
skyrocketed to the point of absurdity.
  In 1991, the average large-company CEO received roughly 140 times the 
pay of an average worker. In 2003, the ratio was up to 500 to 1. It 
takes CEOs of the Nation's top companies the first two hours of the 
first workday of the new year to make $10,712. It takes a minimum wage 
worker 40 hours a week, 52 weeks a year to make the same. According to 
a report by Americans United for Change, those CEOs make $5,279 an 
hour, $10,982,000 a year, or 1,025 times more than their minimum wage 
employees.
  These numbers are even more stunning when one considers that those 
salaries are not based on performance. As hearings held by Chairman 
Frank have shown, even executives of companies that lose money, restate 
earnings, and face extensive regulatory scrutiny have received 
substantial compensation packages.
  The Shareholder Vote on Executive Compensation Act would help hold 
board members accountable when setting executive pay by allowing 
shareholders to vote on whether they approve of the compensation 
packages or not. It would also give shareholders the right to vote on 
golden parachute packages that executives may negotiate for themselves 
when arranging the purchase or sale of the company.
  Although these votes are non-binding, shareholders' voices will be 
heard. Executives and boards of directors will have to give weight to 
the shareholders opinions when deciding on what the gold-plated 
packages of executives will look like. And, it will let executives know 
they are being watched when negotiating the selling price of a company 
while simultaneously negotiating an additional personal exit package.
  A similar shareholder vote has been in practice in the United Kingdom 
since 2003 and is now used in Australia as well. The policy is credited 
with improving management/shareholder dialogue on executive 
compensation matters and increasing the use of long-term performance 
targets in incentive compensation. It was recently adopted voluntarily 
by Aflac, and according to Institutional Shareholder Services, is 
currently pending before 52 companies. I urge my colleagues to support 
H.R. 1257 and make it the norm for all U.S. companies.

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