[Congressional Record (Bound Edition), Volume 153 (2007), Part 7]
[House]
[Pages 9221-9228]
[From the U.S. Government Publishing Office, www.gpo.gov]




PROVIDING FOR CONSIDERATION OF H.R. 1257, SHAREHOLDER VOTE ON EXECUTIVE 
                            COMPENSATION ACT

  Mr. McGOVERN. Mr. Speaker, by direction of the Committee on Rules, I 
call up House Resolution 301 and ask for its immediate consideration.
  The Clerk read the resolution, as follows:

                              H. Res. 301

       Resolved,  That at any time after the adoption of this 
     resolution the Speaker may, pursuant to clause 2(b) of rule 
     XVIII, declare the House resolved into the Committee of the 
     Whole House on the state of the Union for consideration of 
     the bill (H.R. 1257) to amend the Securities Exchange Act of 
     1934 to provide shareholders with an advisory vote on 
     executive compensation. The first reading of the bill shall 
     be dispensed with. All points of order against consideration 
     of the bill are waived except those arising under clause 9 or 
     10 of rule XXI. General debate shall be confined to the bill 
     and shall not exceed one hour equally divided and controlled 
     by the chairman and ranking minority member of the Committee 
     on Financial Services. After general debate the bill shall be 
     considered for amendment under the five-minute rule. It shall 
     be in order to consider as an original bill for the purpose 
     of amendment under the five-minute rule the amendment in the 
     nature of a substitute recommended by the Committee on 
     Financial Services now printed in the bill. The committee 
     amendment in the nature of a substitute shall be considered 
     as read. Notwithstanding clause 11 of rule XVIII, no 
     amendment to the committee amendment in the nature of a 
     substitute shall be in order except those printed in the 
     portion of the Congressional Record designated for that 
     purpose in clause 8 of rule XVIII in a daily issue dated 
     April 17, 2007, or earlier and except pro forma amendments 
     for the purpose of debate. Each amendment so printed may be 
     offered only by the Member who caused it to be printed or his 
     designee and shall be considered as read. At the conclusion 
     of consideration of the bill for amendment the Committee 
     shall rise and report the bill to the House with such 
     amendments as may have been adopted. Any Member may demand a 
     separate vote in the House on any amendment adopted in the 
     Committee of the Whole to the bill or to the committee 
     amendment in the nature of a substitute. The previous 
     question shall be considered as ordered on the bill and 
     amendments thereto to final passage without intervening 
     motion except one motion to recommit with or without 
     instructions.
       Sec. 2. During consideration in the House of H.R. 1257 
     pursuant to this resolution, notwithstanding the operation of 
     the previous question, the Chair may postpone further 
     consideration of the bill to such time as may be designated 
     by the Speaker.

  The SPEAKER pro tempore. The gentleman from Massachusetts (Mr. 
McGovern) is recognized for 1 hour.

                              {time}  1220


                             General Leave

  Mr. McGOVERN. Mr. Speaker, I ask unanimous consent that all Members 
be given 5 legislative days in which to revise and extend their remarks 
on House Resolution 301.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Massachusetts?
  There was no objection.
  Mr. McGOVERN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, for the purpose of debate only, I yield the customary 30 
minutes to the gentleman from Texas (Mr. Sessions). All time yielded 
during consideration of the rule is for debate only.
  Mr. Speaker, H. Res. 301 is an open rule with a preprinting 
requirement providing for the consideration of H.R. 1257, the 
Shareholder Vote on Executive Compensation Act. The rule provides 1 
hour of general debate, controlled by the Committee on Financial 
Services. The rule waives all points of order against consideration of 
the bill except clauses 9 and 10 of rule XXI. The rule makes in order 
the Committee on Financial Services amendment in the nature of a 
substitute as an original bill for the purpose of amendment, which 
shall be considered as read. The rule requires that any amendments to 
the bill must be preprinted in the Congressional Record on or before 
Tuesday, April 17, 2007. Finally, the rule provides one motion to 
recommit, with or without instructions.
  Mr. Speaker, I rise today in support of this open rule. This is a 
good, appropriate rule that allows any germane

[[Page 9222]]

amendment to be debated and voted on by this body, as long as that 
amendment was preprinted in the Congressional Record. This rule is 
appropriate because it allows for real debate and for up or down votes 
on matters related to this bill. I believe this is a good process, and 
I want to commend both Chairman Frank and Ranking Member Bachus for 
requesting this rule and for testifying in support of this rule in the 
Rules Committee yesterday.
  I also rise in support of the underlying legislation. The purpose of 
this bill is straightforward. H.R. 1257, the Shareholder Vote on 
Executive Compensation Act, allows for shareholders of a publicly 
traded corporation to conduct annual nonbinding advisory votes on the 
compensation of the corporation's executives. Basically, this bill 
would allow the shareholders, those with the most vested interests, to 
express their approval or disapproval of a company's compensation 
practices.
  Let me be clear. This bill does not force a company to accede to the 
vote, nor does it overrule a decision by the board of directors of a 
corporation. Instead, it allows the shareholders to demonstrate their 
public approval or disapproval of a corporation's compensation 
practices. The bill does not allow shareholders to set caps on the size 
or nature of executive compensation.
  By allowing for an annual vote by shareholders, H.R. 1257 goes one 
step beyond the recently enacted regulation by the Securities and 
Exchange Commission, which only requires that the amount in executive 
compensation be disclosed.
  Mr. Speaker, this legislation would require public companies to 
include this nonbinding shareholder vote in their annual proxy 
statement to shareholders. An additional nonbinding advisory would also 
be provided to shareholders if the company awards a new compensation 
package while simultaneously negotiating the purchase or sale of the 
company.
  By taking this step, H.R. 1257 increases accountability, and also 
enables the SEC to better monitor the executive compensation practices 
of corporations. I hope that my former colleague from California, Chris 
Cox, now the Commissioner of the SEC, feels encouraged by this 
legislation and works toward further protecting shareholder rights.
  Over the past year, CEOs of major corporations have received 
multimillion-dollar severance packages, despite falling stocks and 
market share drops during their tenures. These so-called ``golden 
parachutes'' highlight the disparity between shareholders' rights and 
executive compensation oversight.
  In addition to neglecting shareholders' interests, current executive 
compensation practices actually hurt the long-term corporate value of a 
company. Unprecedented growth in executive compensation over the past 
two decades has taken money out of the pockets of shareholders and 
compromised the long-term interests of too many companies.
  According to the Corporate Library, in 2006, the average CEO of a 
Standard and Poor's 500 company received $14.78 million in 
compensation. It is only fair that the shareholders, the people who 
actually foot the bill for severance packages, have the opportunity to 
express their support or disapproval of their company's executive 
compensation.
  H.R. 1257 empowers shareholders and complements the SEC's current 
regulations regarding executive compensation.
  Mr. Speaker, I urge my colleagues to support the rule and the 
underlying bill.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SESSIONS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise today in opposition to this rule and to the 
underlying legislation, which I think constitutes an unnecessary and 
unwarranted Federal intrusion into the free enterprise system and the 
private sector. The legislation that the Democrat majority has brought 
to the House today would create a new Federal mandate on publicly held 
companies, but does so in a half-hearted way that would have absolutely 
no practical impact on its purported goal of improving disclosure and 
addressing ``excessive'' executive compensation.
  The Democrats' Shareholder Vote on Executive Compensation Act would 
force every publicly held company to bear the costs of administering a 
toothless, nonbinding shareholder vote on pay packages of its highest 
compensated officials during every proxy vote. It is unclear, however, 
what the outcome of this vote, which under current rules could already 
happen today at any publicly held company, would mean for the company, 
the board of directors, executives or the shareholders.
  Yesterday in the Rules Committee, Chairman Barney Frank testified 
that this vote was not intended to create a new fiduciary 
responsibility for board members. Even if a majority of shareholders 
agreed that a company's executives were being compensated too 
generously, there are no provisions in this legislation to obligate a 
board to comply with this decision.
  So if a board does choose to ignore an affirmative vote, again 
according to Chairman Frank's testimony in the Rules Committee, since 
there is no fiduciary responsibility and no private right of action 
created by this new mandatory shareholder vote, there is no legal 
recourse provided in this bill for shareholders to force board 
compliance.
  So rather than demonstrating the courage of their convictions that 
executive pay is wildly out of control in this country and that 
shareholders should be able to rein it in unilaterally through a ballot 
process, Democrats have chosen to bring legislation to the floor today, 
forcing private entities to take an action that they are already 
capable of taking by their very own nature. But this would make this 
new mandatory vote little more than a weak ``sense of the shareholder'' 
resolution that can be simply ignored by a board with impunity.
  I am also extremely surprised, Mr. Speaker, by the Democrat 
leadership's recent conversion to the merits of democracy in 
determining an organization's actions. Less than 2 months ago, this 
same leadership brought to the floor legislation that strips American 
workers of their right to use a secret ballot to decide whether or not 
to unionize and provides for unprecedented intimidation of employees by 
union bosses under a fundamentally antidemocratic process known as 
``card check.'' But I suppose the Democrats' new-found selective 
commitment to democratic principles is better late than never.
  The reality is that shareholders already have a democratic option 
available to them if they think that a board is shirking its fiduciary 
responsibilities to investors. They can sell their shares and vote with 
their dollars. This is a basic principle of how markets work in a free 
enterprise system, and it has been the steadfast commitment to 
principles like these that has made the American economy the envy of 
the world over the last decade, even while economies across Europe have 
stagnated and shrunk.
  Mr. Speaker, Mr. Frank has represented to the House that the real aim 
of this legislation is not to create a new class of lawsuits for the 
trial bar to exploit, and I take him at his word. But that leaves only 
one sensible explanation for why the Democrat majority would bring such 
a toothless bill to the floor of the House today, and that is to 
provide outsiders, such as Big Labor bosses, environmentalists and so-
called ``consumer activists,'' with a new avenue to criticize the 
management of corporations and to compel boards to do their bidding.

                              {time}  1230

  Information about executive compensation is already fully disclosed 
to investors, who have every opportunity to determine whether or not it 
is too generous before becoming an owner of a listed security. And 
under this bill, even if they decide that it is too generous, the 
legislation contains no enforcement mechanism. This legislation simply 
provides a foot in the door for

[[Page 9223]]

outside organizations to try to bully boards of directors in hopes of 
weakening management and gaining concessions down the road. This bill 
does nothing to improve corporate governance. It does nothing to 
improve board decision-making or increase shareholder value. That is 
why I have submitted an amendment that would force any person or 
organization who spends a significant sum on trying to influence the 
outcome of this new mandatory vote to disclose who they are, how much 
they have spent and on what activities so that investors can have a 
full picture of who is trying to influence them in this decision-making 
process.
  While I think this amendment would improve a misguided bill, I am not 
holding my breath at all that the majority party will join me in 
standing up for increased transparency. But who knows? Today we learned 
that they have radically changed their opinion on the merits of secret 
ballots, so perhaps they will stand up for transparency in proxy vote 
influence-peddling also.
  Mr. Speaker, I oppose this rule and the weak underlying ``sense of 
the shareholder'' legislation. Congress can do better than this. And 
rather than mimicking the interventionist economic policies of Europe, 
I believe we should reject this legislation and stand up for what sets 
our economy apart and has spurred our continued economic and job growth 
while others sank, which would be a commitment to free markets and an 
understanding that when given information, investors can make good 
decisions on their own.
  Mr. Speaker, I stand up for the free enterprise system and the 
American way of doing business.
  Mr. Speaker, I reserve the balance of my time.
  Mr. McGOVERN. Mr. Speaker, again I would remind my colleagues that 
this is an open rule that allowed every Member of this House to be able 
to offer an amendment if that Member so desired. In fact, as the 
gentleman from Texas pointed out, he himself will be offering an 
amendment. And so I think this rule deserves support.
  I should point out for the record that when the gentleman's party, 
the Republic Party, was in the majority here, that even though I was on 
the Rules Committee, routinely Members were denied the right to even 
offer their amendments. There were 13 Members who have decided to offer 
amendments. Ten of them are Republican. I think this is a fair process 
and this rule deserves support.
  Having said that, I would like to yield 4 minutes to the 
distinguished gentlewoman from Florida (Ms. Castor), a member of the 
Rules Committee.
  Ms. CASTOR. I thank my distinguished colleague from the Rules 
Committee for yielding time.
  Mr. Speaker, I urge support of H.R. 1257 to provide a reality check 
to the skyrocketing compensation of CEOs of corporations across 
America. From 1995 to 2005, average CEO pay increased five times faster 
than that of the average worker. The American people understand the 
growing disparities in earnings in our country. The average CEO makes 
more money before lunch than the average worker earns all year. So 
today I urge my colleagues to bring a measure of accountability to the 
boardroom by allowing shareholders to voice their opinions in a 
meaningful way about the multimillion-dollar paydays of their CEOs.
  Last week, one of my hometown newspapers, the St. Petersburg Times, 
reported on ``Corporate Paydays That Boggle the Mind.'' They reported 
that in one of the richest corporate paydays ever, the CEO of oil 
company Occidental Petroleum Corporation received a total compensation 
package last year of $416 million. These record profits and paydays at 
a time when my neighbors and the American people are paying record 
prices at the gas pump highlights the need for a new direction in this 
country for energy policy.
  Similarly, record profits and paydays at HMO and pharmaceutical 
companies raise red flags at a time when patients and doctors and 
hospitals have lost control to many of the Bush privatization schemes 
in our health care system. The new Democratic Congress passed 
legislation fortunately during the first 100 hours to require the 
negotiation of the Medicare part D drug price benefit. This is very 
important. It's un-American to block the negotiation of fair prices 
under Medicare part D.
  What I hear from my seniors back home is that they want Medicare part 
D to be simpler so that it works for them, so that it works for our 
seniors and it works for our taxpayers and not simply benefit the HMOs, 
the big drug companies and their CEOs for these large corporate 
paydays.
  So, Mr. Speaker, I urge support of this rule and this bill to allow 
shareholders to send a message about corporate paydays that boggle the 
mind and bring a measure of accountability to our American boardrooms.
  Mr. SESSIONS. Mr. Speaker, at this time I would like to yield 5 
minutes to the ranking member of the Committee on Financial Services, 
the gentleman from Alabama (Mr. Bachus).
  Mr. BACHUS. Mr. Speaker, I take this opportunity on the rule to 
simply clarify what we're debating here today.
  Now, we are not debating executive compensation, because the Congress 
does not set executive compensation. There have been many examples just 
in the past month or two of what we would judge to be outrageous CEO 
pay packages. There have been many occasions when our constituents have 
said to us, isn't that $200 million going to some executive, isn't that 
outrageous? People hear about these pay packages which, quite frankly, 
I'm not here to defend. One thing they say is, you know, are the 
shareholders being taken advantage of? Are the rank and file being 
taken advantage of? And in many cases, the answer is probably ``yes.'' 
There is no justification for many of these pay packages, these 
executive pay packages. Sometimes they are based on performance and 
value added to the corporation and to the shareholders and to the 
employees, but many times they're not. Many times they're not linked to 
performance.
  Now, having said that, why would I have said that and then come down 
and oppose this legislation? Because, in fact, this is a mandate. This 
is Congress beginning to intrude on corporations.
  Now, many of my colleagues on the other side would say, this is a 
nonbinding resolution. But it is a mandated resolution. If we pass this 
resolution, every publicly traded corporation, both large and small, 
the shareholders in those corporations must take a position on 
corporate executive pay for every top executive. In every case, every 
shareholder must vote on every executive and say your compensation is 
adequate or it's not. It's not justified.
  How many times has this Congress substituted its judgment for the 
American people? For people in business? And that is again what we're 
doing by telling shareholders you must have this vote. This is a 
mandate.
  Now, there is another reason that we ought to oppose this. Congress 
should never rush in and begin to change the free enterprise system, 
our system of competition between companies. What we have required 
through the SEC in the last year and we just now mandated this and to 
come back now with something more intrusive until we see that it works 
is our instruction and the SEC's instruction to public corporations 
that you must publish the pay, the salary, the compensation, the perks, 
the benefits that you give your top corporate executives.

                              {time}  1240

  And the reason we did that is, once that's published and shareholders 
know exactly what these top executives are doing, shareholders have the 
right today. And today they can bring a motion before the corporation, 
and if the majority of shareholders agree, they can take a position on 
executive compensation.
  Now, that is not something we oppose, and in many cases these 
corporations are doing it. Morgan Stanley, just last week, the 
shareholders came forward with a proposal the shareholders took to do 
exactly what this resolution wants to do. And guess

[[Page 9224]]

what? The shareholders at Morgan Stanley said ``no''; the majority of 
shareholders said ``no,'' we are not going to get involved in something 
that might affect the excellent performance of this company, of this 
corporation.
  We have had a system of corporate governance that is second to none 
in the world. It has made us the leader in the free world. It has 
evolved over centuries. It has involved over decades. It is part of our 
statutes.
  Let me say this. The gentleman from Mississippi, the gentlelady from 
Florida, you have come up and you have said, look at some of these 
outrageous pay packages. I agree with you, I agree with you. I have 
picked up the paper. I have said, what is going on here.
  But let me say, on many occasions I have picked up the paper a month 
later and seen where shareholders acted to address these issues. But 
let me say this, how many times have we been approached by constituents 
and we have said, well, when that law was passed, we didn't intend to 
do this, it wasn't our intention to do this. Unintended consequences.
  Let me tell you something. When Congress becomes a second-guesser and 
a judge of executive pay for every corporation in America, every public 
corporation, ladies and gentlemen, we are getting on a slippery slope.
  Mr. McGOVERN. Mr. Speaker, at this time I would like to yield 10 
minutes to the gentleman from Massachusetts, the distinguished chairman 
of the Financial Services Committee (Mr. Frank).
  Mr. FRANK of Massachusetts. I thank the gentleman and the Rules 
Committee for bringing forward an open rule.
  I often disagree with my colleagues on the other side, but I have 
rarely before been as baffled by the illogic of their argument as I am 
today. I do not recall the last time I heard such a hodgepodge of 
inconsistency and inaccuracy.
  This is a bill that has been condemned for being, A, bullying and 
intrusive, and B, toothless. The toothless bully is, I guess, a new 
concept. In fact, let me begin with this denigration of the notion of 
nonbinding resolution.
  The gentleman from Texas kind of slipped, I think, when he said ``the 
sense of shareholder resolution.'' In fact, we spend much of our time 
passing nonbinding resolutions. Members who think nonbinding 
resolutions are a waste of time probably should just show up on 
Wednesday because that is all we do generally on Mondays and Tuesdays, 
although we are doing more since we have taken over.
  But let's get to more of the substantive mistakes. My friend from 
Alabama said we would be second-guessing every corporate salary. Of 
course not. That isn't even remotely close to being even partially 
true. We have deliberately said it is not our job to say what the 
salary should be. We are empowering the shareholders to voice their 
opinion.
  Now, I will acknowledge at the outset, if a board of directors sees a 
vote and the majority of the shareholders vote ``no'' and they decide 
to vote ``yes,'' the board has that right. I doubt that the board would 
do that much. In fact, I would not impute to the boards of directors 
what my colleagues impute to them, a contempt for the views of 
shareholders. There may be individual cases where shareholders didn't 
understand certain things, new events may have intervened. But, no, I 
do not believe that as a general rule people on the board of directors 
will ignore shareholders.
  And by the way, we are talking about the shareholders, and I know the 
gentleman from Texas said they are outsiders, they are activists, as 
loathsome a word as the rules of the House will allow as he would use 
it. They own shares. They are the owners of the companies. What a 
denigration of the people who are in other contexts the fountain of all 
wisdom. We are told the market is, after all, the best source of 
wisdom.
  The former majority leader from Texas used to say, governments are 
dumb; markets are smart, markets work well. Well, who is the market? 
The market consists of the people who own the shares in this case. How 
did they become so dumb when it comes to deciding how to pay for the 
people that work for them?
  And we are told, okay, if they don't like it, they can sell their 
shares. What a concept of ownership. I mean, these are the people, many 
of them who are outraged at the eminent domain issue. What they are 
saying is, if you have owned shares in a company for a while, you have 
made your decision that this is the best way to diversify your 
portfolio, and then some board makes a decision with which you 
disagree, that you think may hurt the company, sell your shares. What 
kind of a denigration of the notion of ownership is that?
  There are, of course, people who will tell you, wait a minute, what 
if I believe when Home Depot, for instance, did what it did with 
Nardelli, it had a very negative effect on people's perception of the 
company. One of the very decisions you disagreed with led to a drop in 
the value of the shares because the market said, why did they do that. 
Should you then sell your shares and be forced to take a loss or take 
corrective action and restore the value to your shares? That is what we 
are talking about. It is very simple.
  And then the oddest one of all is, how dare we interfere with 
corporations? Corporations are artificial creations of positive law. 
God made no corporations. No corporations evolved. I will be neutral on 
that subject. Corporations exist because the law of a jurisdiction 
creates them. It creates them to give them certain advantages, certain 
immunities, et cetera.
  Of course, the government tells corporations what the rules are. This 
notion that we are interfering with corporations is nonsensical. They 
exist according to positive law. And the law says, you must do this, 
you may not do that. That is what corporations are.
  And now the gentleman will say, oh, well, look what the SEC did, we 
don't have to get involved. What the Securities and Exchange Commission 
did was very intrusive. And the gentleman said, well, the corporation 
can do that if they want to; they could have published the salaries if 
they wanted to. The Securities and Exchange Commission said, we mandate 
you to print these salaries.
  And by the way, to the extent that there is an expense, it is much 
more in what the SEC did than in what we did. CBO has concurred, there 
is zero, maybe 8 cents expense here. The SEC has already mandated that 
the corporations print in the proxy form all this information. We 
mandate that they add a box, ``yes or no.''
  And then my friend from Alabama, great civil libertarian, but on this 
one I think he may have gotten a little too extreme in his civil 
libertarian zeal, he said, we are making the shareholders vote. It 
sounded like he said we are standing over those poor shareholders with 
a whip and making them vote. Well, in the first place, we are not. 
Abstention remains an option for shareholders.
  Secondly, the argument is, well, they already have that right, some 
of them. No, they don't in every case. There are corporations that have 
refused to allow it. AT&T was just ordered by the Securities and 
Exchange Commission to allow this procedure, but it was a case-by-case 
issue. It is not a general rule. So the SEC that you defend just 
ordered AT&T to do this, they just intruded, as is their right; but 
there is not a general principle.
  Shareholders do not have a right to have this vote on executive 
compensation. And this bill simply says, the people who own the company 
take what the SEC has mandated they put forward, has a right to vote on 
it. Now we are told, and the gentleman from Texas, in a stirring 
peroration, said he stood for truth, justice, the American way, et 
cetera; and said, let's reject the European effort.
  Well, this is not a general European practice, it is a practice in 
England, what we are talking about. There is a committee that is known 
as the Paulson Committee, because it was inspired by Secretary of the 
Treasury Paulson, chaired by Professor Scott of Harvard. There was the 
McKenzie report, done by Mayor Bloomberg, strongly supported by the 
Chamber of

[[Page 9225]]

Commerce and all the financial groups. They have said to us, can't you 
guys be more like England in your regulation of corporations?
  Listen to the debate going on right now over relations of 
corporations in America. We are being told that the model is the 
British model, the Financial Services authority. This is Secretary 
Paulson's committee that said it, this is the Chamber of Commerce.
  Yes, the English do do this, it is not a big continental thing. But 
if, in fact, you think we should be very careful never to do anything 
because the English are doing it, then where is the repudiation of the 
McKenzie report and the Paulson Committee report which have urged the 
SEC to follow the model of Financial Services.

                              {time}  1250

  In fact, it is very straightforward. Here is the problem. Why do 
normally coherent Members talk in less than coherent form about this, 
making contradictory arguments, ignoring reality?
  Here is the deal. My friend from Alabama said, I am not here to 
defend CEO salaries. But in fact he is, because what this bill says is, 
the shareholders, not the outsiders, not those evil activists, not 
those lurking labor agitators, people who own shares. And, by the way, 
this is strongly supported by the leaders of institutional 
shareholders, large pension funds, The Corporate Library. Shareholder 
groups are in favor of this. And it says that people who own the shares 
should be able to vote in an advisory capacity on whether they think 
the compensation is too much or too little.
  Now, the fact is that the gentleman from Alabama said there have been 
outrageous examples of excessive compensation. It is going up in 
general to the point where it is a record problem, and he says he is 
not here to defend them. He is not here to defend them verbally, he is 
just here to defend them parliamentarily, because if this bill dies, 
then they are totally unimpeded. And Members have said, don't rush in. 
Well, these salaries have been going up for a long time, and this is a 
long-time trend. So if not this, what do you do? It is true, the SEC 
went to the limits of its power.
  Mr. BACHUS. Mr. Speaker, will the gentleman yield?
  Mr. FRANK of Massachusetts. I yield to the gentleman from Alabama.
  Mr. BACHUS. Let me clarify something. I believe, in addressing the 
Speaker, and I respect the chairman, you have allowed debate on this, 
you have been very gracious. But I believe that in addressing the 
Speaker, you mentioned that we passed nonbinding resolutions all the 
time.
  Mr. FRANK of Massachusetts. In the House. Yes, sir.
  Mr. BACHUS. And that this was a nonbinding resolution.
  But I believe this actually is not a nonbinding resolution.
  Mr. FRANK of Massachusetts. The gentleman misunderstands my point, 
and I will correct it. I am taking back my time. I was not referring to 
the gentleman's de facto defense of the salary; I was referring to the 
gentleman from Texas' statement.
  He denigrated the product of this legislation because it would 
produce a nonbinding resolution. In fact, he sneered at it as a sense 
of the stockholder, sense of the shareholder resolution. And my point 
was aimed at his argument that the notion of a sense of the resolution 
is meaningless would invalidate a lot of what we do. So that is the 
issue I was making.
  Let me just say in closing, Members on the other side sometimes get 
separation anxiety when they are forced to differentiate themselves 
from particular corporate abuses. They brought themselves to do it with 
Sarbanes-Oxley, but they are having in various ways buyer's remorse 
there, I think excessive buyer's remorse.
  Members say we don't like corporate excesses, but we can't do 
anything about it.
  Well, no, Congress should not substitute its judgment for the market, 
Congress should not set the salaries. What Congress can do is to 
empower the shareholders who own the companies to express their 
opinion. It is not a right that the shareholders uniformly have now. It 
is Congress in exercise of the legislative power to set the rules for 
corporations, which is inherent in the nature of corporations saying 
that on this one issue; and by the way, one reason for singling them 
out is, there is reason to believe that the relationship between the 
boards of directors and CEOs is not sufficiently arm's length for the 
decision to be left entirely to the board without input.
  It doesn't mean you take the decision away from the board elsewhere. 
It simply says there have been excesses in corporation compensation, we 
think it would be helpful if the shareholders could give an advisory 
vote.
  There is really no good argument against it, and that is why we have 
heard arguments against that aren't very good, that aren't very 
logical, that aren't based in reality. That is all we are voting on.
  And in the absence of this bill, Members can then take credit for 
continuing to enable salaries paid to the top executives to go up and 
up and up. And if you are a shareholder of a corporation and you think 
that is a mistake and you think that is damaging, you have the option, 
we are told, of selling your shares at a loss, of being excluded from 
an investment decision that you think is in your interest. That is not 
acceptable.
  Mr. SESSIONS. Mr. Speaker, I do appreciate the gentleman from 
Massachusetts speaking so clearly about what is happening. I would 
clarify my words and say to the gentleman, I do believe that it would 
be appropriate to have anyone who is attempting to influence an outcome 
of a vote, that they should have a requirement upon them to identify 
themselves, to state how much money they are spending and the 
activities that they are engaged in. And I think that that is full 
disclosure also about the activities that could take place under this 
new nonbinding resolution that we are attempting to pass.
  Mr. Speaker, at this time, I would yield 5 minutes to the ranking 
member of the Rules Committee, the gentleman from San Dimas, California 
(Mr. Dreier).
  Mr. DREIER. Mr. Speaker, I thank my friend from Dallas and thank him 
for his superb management of this rule on our side.
  As I listen to the arguments propounded by my colleagues on the other 
side of the aisle, including the distinguished Chair of the committee, 
the conclusion that I have drawn here is, we have here a solution that 
is really looking for a problem.
  I continue to hear great praise for the action that our former 
colleague Chris Cox, the now chairman of the Securities and Exchange 
Commission, has taken in doing something that we regularly called for 
in this institution when it comes to our work here: transparency, 
disclosure, and accountability.
  Under this regulation that has been promulgated by the Securities and 
Exchange Commission, it calls for full disclosure of the compensation 
packages for the top five executives. What it means is, we are 
empowering shareholders and any other interested party with more 
information, with a better understanding of what it is that we are 
trying to deal with here.
  So why now, after the Securities and Exchange Commission has done 
what the chairman of the Financial Services Committee, Mr. Frank, has 
just said is actually going beyond what it is that we are doing, why do 
we need to take action here in this institution on this issue?
  Now, while I know that my friend from Massachusetts and my friend 
from Alabama, the distinguished chairman of the committee and the 
ranking member, had this exchange on nonbinding resolutions and the 
impact that this might have, I think most have concluded that there is 
a very deleterious potential impact that this legislation could have; 
and that is, it quite possibly will dramatically enhance the number of 
potentially frivolous lawsuits being brought forward by shareholders.
  Now, I find that very troubling in light of the fact that we have in 
a bipartisan way in the past been able to

[[Page 9226]]

pass legislation which has been trying to focus on the tremendous cost 
burden that is imposed on the American consumers, shareholders, 
taxpayers, all the way across the board, with the number of frivolous 
lawsuits that we have seen. And, again, we want very much to see the 
market run its course on this issue.
  I think that this is bad legislation. I think it is poorly crafted. 
And I think, again, based on the action that the Securities and 
Exchange Commission has taken, let's see how that works. Let's let it 
go into place. Let's let the entity which has responsibility for this 
deal with it, see them work and see this information come forward, and 
see if we still have what is seen by many to be a problem.
  I also argue that as we look at these compensation packages that have 
existed, and there are a heck of a lot more than any of us in this body 
make, that is for darn sure, but the fact of the matter is, these are 
decisions that boards of directors make. And one of the precious rights 
that we have as American citizens is the right not to own a stock. 
There is no one that I know on the face of the Earth who is compelled 
to purchase a share of stock, and I think that the right not to own a 
stock is a precious one.
  And, you know, if I don't like the decision that the CEO of a company 
that I own a stock in or that the board of directors of that company 
makes, you know what, I will sell that stock. And I am happy to sell 
that stock, and that is my right to do it. If I don't like the decision 
that a board of directors has made, a decision that a board of 
directors has made when it comes to compensation for their executives, 
if that really is driving me and I am convinced that the stock should 
be much higher, I will sell it. So I believe that it is a real mistake 
for us to make this kind of overreach.
  And, Mr. Speaker, I also have to say that I am very troubled with 
what we are seeing here now as the new definition for rules that have 
come forward. Now, I entered into the Record of the Rules Committee 
last evening back to the 103rd Congress when our distinguished former 
colleague, Joe Moakley, was chairman of the committee and he had in his 
survey of activities of the Rules Committee the definition of rules. 
This rule that has come forward is defined as an open rule with a 
preprinting requirement, but, Mr. Speaker, it is much more than that.

                              {time}  1300

  Traditionally, an open rule that has a preprinting requirement has 
been known under Democratic and Republican Congresses as a modified 
open rule. Our colleagues, in their quest to say that they have had 
more and more open rules, have redefined what an open rule is, but the 
thing that troubles me is not just that they have done that. But they, 
by passage of this rule, have actually prevented Members of Congress 
from being able to participate in this under an open amendment process.
  Why? The majority leader has apparently announced that we are going 
today to begin consideration of this shareholder bill, and then we are 
going to consider it on Friday. So what it means is, as we proceed with 
the amendment process today, Mr. Speaker, unfortunately what we are 
doing is we are saying to Members of the House of Representatives who 
want to amend this bill on Friday that any amendment that they might be 
offering had to have been printed in the Congressional Record last 
night, 3 days before the measure is considered on the floor, and they 
are trying to define that as an open amendment process.
  Mr. Speaker, if it looks like a duck and walks like a duck and talks 
like a duck, it is a duck. And you know what? This is not an open rule.
  I urge my colleagues to oppose the rule and to oppose the underlying 
legislation.
  Mr. McGOVERN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, let me first of all say that I apologize to the 
gentleman from California, the former distinguished chairman of the 
Rules Committee, for this open rule. I guess he is upset that 13 
Members have decided to offer amendments. They have known about this 
bill, by the way, for close to 3 weeks. So 13 Members, 10 of them 
Republican, have decided to put forward amendments that will be debated 
and considered on this floor, including the distinguished gentleman 
from Texas (Mr. Sessions).
  I do not know whether the gentleman from California wants me to 
apologize to Mr. Sessions and the other Republicans for allowing their 
amendments to be made in order, but the bottom line is, what we are 
trying to do is break the trend that existed in the Rules Committee 
when they were in charge, which is that nobody would be allowed to 
offer amendments on the floor.
  One of the things that this leadership has promised is a more open 
process, a process that is more fair, and that is what we are trying to 
do today. There are 13 amendments that have been pre-filed. They will 
all be considered on the floor unless the people who printed those 
amendments do not want to offer them. That is a fair process.
  As somebody who sat on the Rules Committee for many years and who 
routinely saw closed rules reported under that committee with not a 
peep from anybody on that side, it is a little bit hard to digest this 
whining over an open process. I guess my colleagues on the other side 
of the aisle object to the fact that Members should have a right to 
read an amendment that they are going to vote on. I can understand that 
because they would routinely bring huge bills, hundreds of pages in 
length, to the floor without giving anybody in this Chamber the 
opportunity to read them. Those practices hopefully are over for good.
  This is a fair rule. This is an open rule, and I urge my colleagues 
to support it.
  At this point, let me inquire from the gentleman from Texas whether 
or not he has any additional speakers, because at this point, I am the 
last one on this side.
  Mr. SESSIONS. Mr. Speaker, I thank the gentleman for the inquiry. At 
this time, we have one additional speaker.
  Mr. McGOVERN. I would let the gentleman proceed, and I reserve the 
balance of my time.
  Mr. SESSIONS. Mr. Speaker, I yield 4 minutes to the gentleman from 
Georgia (Mr. Price).
  Mr. PRICE of Georgia. Mr. Speaker, I thank my good friend from Texas 
for yielding and for his leadership on this issue.
  I would like to just comment about both the rule and the bill; and, 
Mr. Speaker, I come to the floor today to just tell you that Orwellian 
democracy continues to be alive and well here in the House Chamber.
  Our good friends on the other side of the aisle seem to think that, 
if they just say something, that it is, that their action does not make 
any difference. This is the open rule that is not. That is what this 
is.
  Because what we have, as my good friend from California described, is 
in fact a modified open rule. What has occurred with this rule is that 
there is a requirement for pre-filing amendments to this bill, and in 
fact, the pre-filing had to occur about 72 hours before the final 
portion of the bill will be voted upon. That is not an open rule, Mr. 
Speaker.
  An open rule is when the bill comes to the floor and anybody who has 
an idea and wants to offer an amendment is allowed to offer an 
amendment. Why is that important? Well, that is important because each 
of us represents a certain number of constituents around this Nation, 
and at some point, each of us may have a better idea about how the bill 
ought to progress through the process.
  But right now, what has happened is, unless we had that idea 2 days 
ago, yesterday, then it is not able to be entertained. So this is not 
an open rule.
  I would ask my friends in the majority party: What are you afraid of? 
What are you afraid of? What amendment is it that you are afraid of 
that might be brought to the floor that is so dangerous to the American 
people that you do not want to even talk about it? That is what I would 
ask.
  Mr. Speaker, my good friend from Massachusetts says that he thinks it 
is

[[Page 9227]]

important for people to be able to read amendments and read bills. 
Well, we do, too, but that is provided for in the rules. That is 
provided for in the rules. This rule does not address that. The fact 
that somebody might bring an amendment to the floor under a truly open 
rule would not affect that at all.
  So he also asked whether he should apologize to the gentleman from 
California for having what he described as on open rule. No, Mr. 
Speaker, I would suggest that he apologize to the American people for 
not carrying out the responsibility of democracy in this Chamber.
  So this is not an open rule. This is the open rule that was not, and 
it is important for the American people to appreciate that.
  I do want to mention a couple of items about the merits of the bill 
itself. We all had an opportunity to be home for the past 2 weeks. This 
was one issue that constituents in my district wanted to talk about. 
They wanted to talk about whether or not it was appropriate for 
Washington to insert itself into the compensation for CEOs in this 
Nation.
  Many people, I being one of them, are confused and concerned about 
some of the compensation that major CEOs are getting in this Nation, 
but everybody in my district appreciates and understands that the place 
to solve that problem is not Washington, DC. In fact, that is the last 
place that you want this problem to be solved because Washington, DC, 
cannot respond in a nimble enough fashion to be able to do so. In fact, 
there will be significant, unintended consequences, I would suggest, 
Mr. Speaker.
  As you know, the challenges that all businesses have across this 
Nation are encumbered by the taxation that they are required to pay by 
the exposure to litigation and, yes, Mr. Speaker, by the regulations 
that come down from on high, and this will be another regulation. So 
what the majority party is doing is saying to our businesses across 
this Nation, our public companies across this Nation is, you have got 
another reason to go offshore; you have got another reason to take 
American jobs and remove them because we are going to make it too 
difficult for you to engage in your business here in America.
  In fact, Mr. Speaker, what they are going to do is to make it so 
difficult for many businesses with their onerous regulations that not 
only will individuals take their businesses offshore, many of them will 
say it is just too much of a challenge to comply with all of your 
ridiculous regulations, so we will go private so that Americans all 
across this Nation will be precluded from participating in a greater 
way in the American Dream.
  Mr. Speaker, this rule is a bad idea. The bill is a bad idea. 
Washington cannot solve this problem. You know that, and I urge my 
colleagues to oppose both.
  Mr. McGOVERN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, if the gentleman from Georgia thinks this rule is such a 
bad idea, I hope that maybe he might reconsider offering the three 
amendments that he has pre-filed.
  Let me just say for the record, because I think it is important to 
state this, the gentleman from Georgia just went on a rant, and in the 
previous Congress when his party was in control, in the entire Congress 
there was one open rule that was not an appropriation bill, one, and I 
do not recall a single instance when the gentleman from Georgia ever 
came to the floor and complained about that. I do not recall a single 
instance when the gentleman from Georgia or, quite frankly, anybody on 
the other side came to the floor and objected when the Republican-
controlled Rules Committee waived the requirement that Members have 3 
days to be able to read a report before a bill was considered.

                              {time}  1310

  I don't remember a single instance when the gentleman from Georgia, 
or, quite frankly, anybody who we have heard complain today, ever came 
on the House floor and voted against a closed rule. They ran this place 
under the most restrictive closed process in the history of this 
Congress.
  I think that needs to be said for the record because it goes to the 
point that I was making earlier that I don't understand what all the 
complaints are about. You have every Member who wanted to offer an 
amendment to this bill given the opportunity to do so.
  They knew that this bill was coming 3 weeks in advance. They could 
have thought about it for 3 weeks, they could have instructed their 
staff during that period of 3 weeks to come up with something. 
Obviously, a number of people did, including the gentleman from 
Georgia, who has three amendments we are going to have to listen to.
  Let me again urge my colleagues to support this rule. It is a fair 
rule. It is an open rule.
  I am sorry if they don't like the fact that Members ought to have an 
opportunity to read amendments and read bills before they are voted on, 
but I think that is a fair thing to do. Of course, when they were in 
charge, they would routinely waive that right. But, you know, we will 
respect that.
  Mr. Speaker, I reserve the balance of my time and would ask the 
gentleman from Texas if he has any additional speakers.
  Mr. SESSIONS. In response to the gentleman at this time, I do not 
have any additional speakers. I would use this time for my close. I 
thank the gentleman for the inquiry.
  Mr. Speaker, I think the point that would be taken here would follow 
those words that David Dreier spoke on, and that is, we simply call 
things what they are honestly. We don't try to call things what they 
aren't. We follow the regular order of this House, as has been 
established, going back at least to the 103rd Congress when Mr. 
Moakley, the chairman of the Rules Committee, said, this is what we 
will call things, this is what an open rule is, this is what a modified 
rule is. That is the point we are trying to make today, that you should 
call something what it is.
  At this time, I would like to include a statement of administration 
policy on this bill.

  Statement of Administration Policy--H.R. 1257--Shareholder Vote on 
                   Executive Compensation Act of 2007


       (representative frank (d) massachusetts and 27 cosponsors)

       The Administration opposes H.R. 1257, which would require 
     public companies to hold a separate advisory shareholder vote 
     to approve the compensation of executives. The Administration 
     does not believe that Congress should mandate the process by 
     which executive compensation is approved.
       The Administration supports full transparency to 
     shareholders regarding executive compensation decisions. 
     Recent enhancements in corporate governance and disclosure 
     have strengthened the executive compensation decision-making 
     process of boards of directors. Corporate governance changes 
     have made boards more independent, including through the 
     establishment of compensation committees composed solely of 
     independent directors. In addition, as a result of the 
     Securities and Exchange Commission's revised disclosure rules 
     on executive compensation, which recently became effective, 
     shareholders are receiving comprehensive information on 
     executive compensation. Before additional corporate 
     governance requirements are legislated, the Administration 
     believes that recent enhancements should be given time to 
     take effect.

  The statement of the administration is quite succinct, and that is at 
the end of this statement it says ``before additional corporate 
governance requirements are legislated, the administration believes 
that the recent enhancements should be given time to take effect. That 
is in reference to the SEC and what the SEC had done.
  Mr. Speaker, I am asking Members to oppose the previous question so 
that I may amend the rule to make it a true, modified open rule. As the 
distinguished chairman of the Committee on Financial Services pointed 
out yesterday at the Rules Committee, he is expecting that 
consideration of the bill is likely to continue through the end of the 
week.
  But under a normal modified open rule, Members would still be allowed 
to submit amendments for printing today or tomorrow so that they might 
be considered tomorrow or Friday. This restrictive rule severely limits 
the fluidity which traditional and modified open rules allow. This rule 
is not an

[[Page 9228]]

open rule as it is currently drafted. It would not even be qualified as 
a modified open rule. This is a restrictive rule.
  Mr. Speaker, I ask unanimous consent that the text of the amendment 
and extraneous material be printed just before the vote on the previous 
question.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  Mr. SESSIONS. I also urge Members to oppose the previous question.
  Mr. Speaker, I yield back the balance of my time.
  Mr. McGOVERN. Mr. Speaker, let me urge all my colleagues to support 
the rule and to also support the underlying bill. H.R. 1257 is a good 
bill. If you want to defend the status quo, then vote against it. But 
if you want more accountability, more transparency, then vote for it. 
This should not be a partisan issue, and I hope that it would get a 
strong bipartisan vote on passage.
  Let me again urge my colleagues to support the rule, and this is a 
rule that allows the gentleman from Texas to be able to offer an 
amendment. It allows the gentleman from Georgia, whom we heard earlier, 
to offer three amendments. It allows for every single Member of this 
House, Democrat or Republican, to be able to offer an amendment to this 
bill.
  This is something new compared to the way the Rules Committee was run 
under the previous leadership. This is a rule that allows people to be 
able to heard, to be able to bring their views to the floor, and to be 
able to debate them. For the gentleman from Texas or the gentleman from 
Georgia or anybody else to complain that somehow this is a restrictive 
rule just defies the facts.
  The fact of the matter is that under their leadership, restrictive 
rules were the norm. Closed rules were the norm. Not once, not once did 
I hear anybody on the other side complain about the restrictive rule or 
closed rule or even vote against the closed rule. This allows every 
single Member who wanted to offer an amendment to offer an amendment.
  This is an open rule with a preprinted requirement. This is a good 
rule. I would urge all my colleagues to support the rule.
  The material previously referred to by Mr. Sessions is as follows:

       (The information contained herein was provided by 
     Democratic Minority on multiple occasions throughout the 
     109th Congress.)

        The Vote on the Previous Question: What It Really Means

       This vote, the vote on whether to order the previous 
     question on a special rule, is not merely a procedural vote. 
     A vote against ordering the previous question is a vote 
     against the Democratic majority agenda and a vote to allow 
     the opposition, at least for the moment, to offer an 
     alternative plan. It is a vote about what the House should be 
     debating.
       Mr. Clarence Cannon's Precedents of the House of 
     Representatives, (VI, 308-311) describes the vote on the 
     previous question on the rule as ``motion to direct or 
     control the consideration of the subject before the House 
     being made by the Member in charge.'' To defeat the previous 
     question is to give the opposition a chance to decide the 
     subject before the House. Cannon cites the Speaker's ruling 
     of January 13, 1920, to the effect that ``the refusal of the 
     House to sustain the demand for the previous question passes 
     the control of the resolution to the opposition'' in order to 
     offer an amendment. On March 15, 1909, a member of the 
     majority party offered a rule resolution. The House defeated 
     the previous question and a member of the opposition rose to 
     a parliamentary inquiry, asking who was entitled to 
     recognition. Speaker Joseph G. Cannon (R-Illinois) said: 
     ``The previous question having been refused, the gentleman 
     from New York, Mr. Fitzgerald, who had asked the gentleman to 
     yield to him for an amendment, is entitled to the first 
     recognition.''
       Because the vote today may look bad for the Democratic 
     majority they will say ``the vote on the previous question is 
     simply a vote on whether to proceed to an immediate vote on 
     adopting the resolution . . . [and] has no substantive 
     legislative or policy implications whatsoever.'' But that is 
     not what they have always said. Listen to the definition of 
     the previous question used in the Floor Procedures Manual 
     published by the Rules Committee in the 109th Congress, (page 
     56). Here's how the Rules Committee described the rule using 
     information form Congressional Quarterly's ``American 
     Congressional Dictionary'': ``If the previous question is 
     defeated, control of debate shifts to the leading opposition 
     member (usually the minority Floor Manager) who then manages 
     an hour of debate and may offer a germane amendment to the 
     pending business.''
       Deschler's Procedure in the U.S. House of Representatives, 
     the subchapter titled ``Amending Special Rules'' states: ``a 
     refusal to order the previous question on such a rule [a 
     special rule reported from the Committee on Rules] opens the 
     resolution to amendment and further debate.'' (Chapter 21, 
     section 21.2) Section 21.3 continues: Upon rejection of the 
     motion for the previous question on a resolution reported 
     from the Committee on Rules, control shifts to the Member 
     leading the opposition to the previous question, who may 
     offer a proper amendment or motion and who controls the time 
     for debate thereon.''
       Clearly, the vote on the previous question on a rule does 
     have substantive policy implications. It is one of the only 
     available tools for those who oppose the Democratic 
     majority's agenda and allows those with alternative views the 
     opportunity to offer an alternative plan.
                                  ____


       Amendment to H. Res. 301 Offered by Rep. Sessions of Texas

       On page 2, lines 18 and 19, strike ``in a daily issue dated 
     April 17, 2007, or earlier''.

  Mr. McGOVERN. Mr. Speaker, I yield back the balance of my time, and I 
move the previous question on the resolution.
  The SPEAKER pro tempore. The question is on ordering the previous 
question.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Mr. SESSIONS. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further 
proceedings on this question will be postponed.

                          ____________________