[Congressional Record Volume 155, Number 70 (Thursday, May 7, 2009)]
[Senate]
[Pages S5290-S5291]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DURBIN:
  S. 1006. A bill to require a supermajority shareholder vote to 
approve excessive compensation of any employee of a publicly-traded 
company; to the Committee on Banking, Housing, and Urban Affairs.
  Mr. DURBIN. Mr. President, Americans have every right to be outraged 
over the recent bonuses given to employees of the group within AIG that 
led to that company's collapse. American taxpayers have provided $185 
billion--and counting--to save a firm that has been deemed ``too 
interconnected to fail.''
  It is unacceptable that millions of those taxpayer dollars have been 
handed over to some of the executives who caused this disaster in the 
first place. If there is a constitutional way to reclaim those bonuses, 
I support it.
  But it is important to remember that executive compensation practices 
have been out of control for many years. While the wages and benefits 
of middle class workers have stagnated, CEO compensation has exploded.
  According to the Economic Policy Institute's ``State of Working 
America,'' in 1965 U.S. CEOs at major companies made 24 times the pay 
of an average worker. By 2005, CEOs earned 262 times the pay of an 
average worker.
  The comparison between CEOs and minimum wage workers is even starker. 
In 1965 U.S. CEOs at major companies made 51 times the pay of workers 
earning the minimum wage. By 2005, CEOs earned 821 times the pay of 
workers earning the minimum wage.
  These comparisons are important not because they could be used to 
incite calls for class warfare, but because the American people deserve 
an honest accounting of the activities of the corporations that touch 
their lives in so many ways. Every American deserves an honest wage for 
honest work. And every American, from the top of the corporate ladder 
to the bottom, deserves to know whether they are being compensated 
fairly--whether they are sharing in the rewards of the company's work 
or whether their labors are mainly fueling ever more extravagant pay 
for the top executives.
  We have lost the balance we once had in America. Executive pay has 
soared, while pay for many s has not even kept pace with their 
productivity increases. It's not surprising that there is widespread 
fury when CEOs get it wrong. After all, they have a hand in setting 
their own salaries. But recently, the anger of the average American 
worker has boiled over because so many CEOs have gotten it so wrong. 
That outcome is not healthy for our economy, and it's not healthy for 
our society.
  If companies want to pay their executives handsomely for excellent 
performance, they should be able to do that. They should be able to 
compete for top talent. But the shareholders should be looking over 
their shoulders as they adopt excessive pay structures, and the 
taxpayers shouldn't be subsidizing the resulting income disparities.
  To restore some balance, the shareholders of a corporation should 
have to approve lucrative compensation packages. And, the companies 
shouldn't receive a tax deduction for handing out excessive pay.

[[Page S5291]]

  That is why today I am introducing two bills--the Excessive Pay 
Shareholder Approval Act S. 1006, and the Excessive Pay Capped 
Deduction Act, S. 1007.
  The Excessive Pay Shareholder Approval Act would require a 
supermajority--60 percent--vote of the shareholders to approve a 
compensation structure in which any employee receives more than 100 
times more than the average employee of that company. Corporations 
could pay executives whatever they think is appropriate, but 
shareholders would have to OK packages that are 100 times as large as 
the average worker earns. This bill would require greater transparency 
in compensation and would encourage companies to think about how they 
pay their lower-paid workers, not just how they reward the people at 
the top.
  Similarly, the Excessive Pay Capped Deduction Act would limit the 
normal tax deduction for compensation for executives to 100 times the 
compensation of the average worker at that company. Again, corporations 
could pay executives whatever they decide is appropriate, but they 
could not claim limitless tax benefits for doing so. This bill also 
would encourage companies to look at their entire compensation 
structure, and it would protect taxpayers.
  Here is an example. If the average worker at a company earned, 
including wages, paid leave, supplemental pay, and retirement, the same 
amount as the average worker nationwide in December of 2008, that 
worker would have earned around $50,000. At that company, a 
supermajority of shareholders would be required to approve pay packages 
larger than $5 million and that company could not deduct compensation 
in excess of $5 million.
  How many companies would this affect? According to the research firm 
The Corporate Library, in 2007 the median compensation for CEOs of S&P 
500 companies was $8.8 million. Therefore, if these companies are only 
paying average wages across the rest of the company, many of them would 
be affected by this legislation. Many would not.
  From our founding, this country has benefitted from a sense of unity 
and balance that has brought Americans together in good times and in 
bad. If the rewards handed out by our leading corporations flow 
excessively to the very wealthy while leaving middle-class families 
behind, we risk losing that sense of common purpose. The uproar over 
AIG bonuses showed very clearly the corrosive effects of compensation 
packages that appear to be disconnected from the reality that the 
average family faces day in and day out.
  The two bills I am introducing today would help to restore some of 
the balance we have lost, by ensuring greater accountability for the 
disparities in compensation for corporate leaders and the average 
workers they employ, and by protecting taxpayers when a company's 
compensation packages reach extreme levels.
  I urge my colleagues to support both bills.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1006

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Excessive Pay Shareholder 
     Approval Act''.

     SEC. 2. AMENDMENT TO THE SECURITIES EXCHANGE ACT OF 1934.

       (a) In General.--Section 16 of the Securities Exchange Act 
     of 1934 (15 U.S.C. 78n) is amended by adding at the end the 
     following new subsection:
       ``(h) Annual Shareholder Approval of Executive 
     Compensation.--
       ``(1) In general.--The compensation for an employee of an 
     issuer in any single taxable year may not exceed an amount 
     equal to 100 times the average compensation for services 
     performed by all employees of that issuer during such taxable 
     year, unless not fewer than 60 percent of the shareholders 
     have voted to approve such compensation (through a proxy or 
     consent or authorization for an annual or other meeting of 
     the shareholders, occurring within the preceding 18 months).
       ``(2) Proxy contents.--Proxy materials for a shareholder 
     vote required by paragraph (1) shall include--
       ``(A) the amount of compensation paid to the lowest paid 
     employee of the issuer;
       ``(B) the amount of compensation paid to the highest paid 
     employee of the issuer;
       ``(C) the average amount of compensation paid to all 
     employees of the issuer;
       ``(D) the number of employees of the issuer who are paid 
     more than 100 times the average amount of compensation for 
     all employees of the issuer; and
       ``(E) the total amount of compensation paid to employees 
     who are paid more than 100 times the average amount of 
     compensation for all employees of the issuer.
       ``(3) Definition of compensation.--
       ``(A) In general.--For purposes of this subsection, the 
     term `compensation' includes wages, salary, fees, 
     commissions, fringe benefits, deferred compensation, 
     retirement contributions, options, bonuses, property, and any 
     other form of remuneration that the Commission determines is 
     appropriate, in consultation with the Secretary of the 
     Treasury.
       ``(B) Part-time and part-year employees.--In the case of 
     any employee which is a part-time employee of the issuer, or 
     which is not employed by the issuer for a full taxable year, 
     the compensation of such employee shall be calculated for 
     purposes of this subsection on an annualized basis.''.
       (b) Deadline for Rulemaking.--Not later than 1 year after 
     the date of enactment of this Act, the Securities and 
     Exchange Commission shall issue any final rules and 
     regulations required to carry out section 16(h) of the 
     Securities Exchange Act of 1934, as added by this section.
                                 ______