[House Report 110-88]
[From the U.S. Government Publishing Office]



110th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     110-88

======================================================================



 
             SHAREHOLDER VOTE ON EXECUTIVE COMPENSATION ACT

                                _______
                                

 April 16, 2007.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Frank of Massachusetts, from the Committee on Financial Services, 
                        submitted the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 1257]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Financial Services, to whom was referred the 
bill (H.R. 1257) to amend the Securities Exchange Act of 1934 
to provide shareholders with an advisory vote on executive 
compensation, having considered the same, report favorably 
thereon with an amendment and recommend that the bill as 
amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     3
Hearings.........................................................     5
Committee Consideration..........................................     5
Committee Votes..................................................     6
Committee Oversight Findings.....................................    15
Performance Goals and Objectives.................................    15
New Budget Authority, Entitlement Authority, and Tax Expenditures    16
Committee Cost Estimate..........................................    16
Congressional Budget Office Estimate.............................    16
Federal Mandates Statement.......................................    17
Advisory Committee Statement.....................................    17
Constitutional Authority Statement...............................    18
Applicability to Legislative Branch..............................    18
Earmark Identification...........................................    18
Section-by-Section Analysis of the Legislation...................    18
Changes in Existing Law Made by the Bill, as Reported............    19
Minority, Dissenting, or Additional Views........................    21

                               Amendment

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Shareholder Vote on Executive 
Compensation Act''.

SEC. 2. SHAREHOLDER VOTE ON EXECUTIVE COMPENSATION DISCLOSURES.

  (a) Amendment.--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.--Any proxy or consent or authorization for 
        an annual or other meeting of the shareholders occurring on or 
        after January 1, 2009, shall permit a separate shareholder vote 
        to approve the compensation of executives as disclosed pursuant 
        to the Commission's compensation disclosure rules (which 
        disclosure shall include the compensation discussion and 
        analysis, the compensation tables, and any related material). 
        The shareholder vote shall not be binding on the board of 
        directors and shall not be construed as overruling a decision 
        by such board, nor to create or imply any additional fiduciary 
        duty by such board, nor shall such vote be construed to 
        restrict or limit the ability of shareholders to make proposals 
        for inclusion in such proxy materials related to executive 
        compensation.
          ``(2) Shareholder approval of golden parachute 
        compensation.--
                  ``(A) Disclosure.--In any proxy solicitation material 
                for an annual or other meeting of the shareholders 
                occurring on or after January 1, 2009, that concerns an 
                acquisition, merger, consolidation, or proposed sale or 
                other disposition of substantially all the assets of an 
                issuer, the person making such solicitation shall 
                disclose in the proxy solicitation material, in a clear 
                and simple form in accordance with regulations of the 
                Commission, any agreements or understandings that such 
                person has with any principal executive officers of 
                such issuer (or of the acquiring issuer, if such issuer 
                is not the acquiring issuer) concerning any type of 
                compensation (whether present, deferred, or contingent) 
                that are based on or otherwise relate to the 
                acquisition, merger, consolidation, sale, or other 
                disposition, and that have not been subject to a 
                shareholder vote under paragraph (1).
                  ``(B) Shareholder approval.--The proxy solicitation 
                material containing the disclosure required by 
                subparagraph (A) shall require a separate shareholder 
                vote to approve such agreements or understandings. A 
                vote by the shareholders shall not be binding on the 
                board of directors and shall not be construed as 
                overruling a decision by such board, nor to create or 
                imply any additional fiduciary duty by such board, nor 
                shall such vote be construed to restrict or limit the 
                ability of shareholders to make proposals for inclusion 
                in such proxy materials related to executive 
                compensation.''.
  (b) Deadline for Rulemaking.--Not later than 1 year after the date of 
the enactment of this Act, the Securities and Exchange Commission shall 
issue any final rules and regulations required by the amendments made 
by subsection (a).

                          Purpose and Summary

    H.R. 1257, the Shareholder Vote on Executive Compensation 
Act, amends the Securities and Exchange Act of 1934 to provide 
shareholders with a meaningful say on their company's executive 
compensation practices without setting any caps on executive 
pay or micromanaging the company. It will do this by (1) 
requiring that public companies include in their annual proxy a 
nonbinding shareholder vote on the executive compensation 
disclosures already required by the Securities and Exchange 
Commission; and (2) requiring a separate shareholder vote for 
additional compensation that is tied to the sale or purchase of 
a company.

                  Background and Need for Legislation

    According to the Corporate Library's 2006 Chief Executive 
Officer (CEO) Pay Survey of roughly 1400 CEOs (covering pay in 
FY 2005), the median CEO received $13.51 million in total 
compensation, up 16 percent over FY 2004. This came on the 
heels of a 30 percent increase over FY 2003, 15 percent over FY 
2002 and 9.5 percent over FY 2001. In addition to the 
compounding effect of this year-over-year growth, some note 
that looking at median pay alone artificially reduces the 
problem because medians do not account for the large pay 
increases at the upper extreme. (For example, the 2005 Pay 
Survey found that the average CEO pay was up 91 percent, after 
27 CEOs received over 1,000 percent more than their previous 
year's pay).
    Another report, done by USA Today in March 2005, found that 
median CEO compensation in 2004 was $14 million (with one CEO 
receiving $84 million exercising options, and new options 
grants worth more than $130 million). In comparison, the same 
study found that the average rank-and-file worker's pay 
increased 2.5 percent.
    The disparity between workers and executives has grown 
significantly in recent years. In their book Pay Without 
Performance, Lucian Bebchuk and Jesse Fried found that in 1991, 
the average large-company CEO received approximately 140 times 
the pay of an average worker; in 2003, the ratio was about 500 
to 1. Researchers argue that the amounts have risen so far so 
fast that they can no longer be explained by traditional 
valuation models. Even when adjusting for other variables, 
researchers found that executive compensation is significantly 
higher today than in the early 1990s. For example, Lucian 
Bebchuk and Yaniv Grinstein found ``[d]uring this period [1993-
2003], pay has grown much beyond the increase that could be 
explained by changes in firm size, performance and industry 
classification. Had the relationship of compensation to size, 
performance and industry classification remained the same in 
2003 as it was in 1993, mean compensation in 2003 would have 
been only about half of its actual size.'').\1\
---------------------------------------------------------------------------
    \1\ Lucian Bebchuk and Yaniv Grinstein, ``The Growth in Executive 
Pay,'' 2005.
---------------------------------------------------------------------------
    The Cost of Executive Compensation. The amount of money 
paid to executives of public companies reflects real costs to 
shareholders and the economy. According to Bebchuk and 
Grinstein's research, in 1993, the aggregate compensation paid 
to the top five executives of U.S. public companies represented 
5 percent of company profits; by 2003 the ratio had more than 
doubled to 10 percent and the total amount paid to these 
executives during this period was roughly $350 billion.
    Concerns Over Incentives for Executives. In addition to 
concerns about the sheer size, some have noted that these 
packages may be giving executives incentives that undermine 
shareholder value and market confidence:
           Earnings Manipulation. Putting aside 
        outright earnings fraud, because accounting standards 
        are not always clear, excessive compensation 
        (particularly very large bonuses based on meeting 
        ``Wall Street expectations'') may be giving executives 
        an incentive to use ``aggressive'' accounting methods 
        that maximize their compensation. By meeting certain 
        triggers (even by hundredths of a percentage point), 
        executives can reap enormous sums of money. Years (or 
        months) later, if a company is forced to restate its 
        earnings--and shareholder value plummets--executives 
        may retain their bonuses.\2\
---------------------------------------------------------------------------
    \2\ See, e.g., ``Sorry, I'm Keeping the Bonus Anyway'' New York 
Times, Mar. 13, 2005.
---------------------------------------------------------------------------
           Unprofitable Mergers/Acquisitions. Because 
        senior executives may receive additional compensation 
        when they buy a new company or sell their current one 
        (and are responsible for negotiating or agreeing to the 
        overall deal), there can be a conflict of interest 
        between the executives' interest (i.e. closing the deal 
        and obtaining a ``golden parachute'') and the company's 
        interest (i.e. maximizing shareholder value). Studies 
        of mergers have found that target CEOs were willing to 
        accept lower acquisition premiums when the acquirer 
        promised them high-ranking managerial post after the 
        acquisition.\3\ There are concerns that similar results 
        might follow from direct monetary compensation.
---------------------------------------------------------------------------
    \3\ See Hartzell, Ofek and Yermack, ``What's In It For Me? CEOs 
Whose Firms Are Acquired.'' Review of Financial Studies 17:37-61 
(2004); and Julie Wulf ``Do CEOs in Mergers Trade Power for Premium? 
Evidence from `Mergers of Equals,' '' Journal of Law, Economics & 
Organization 20 (2004): 60-101.
---------------------------------------------------------------------------
    Growth in Compensation Does Not Appear Tied to Performance. 
Several observers have argued that executive compensation is 
not tied to company performance. Others have noted that in many 
instances senior executives appear to be being ``paid for 
failure.'' As the Financial Services Committee has seen first 
hand, even executives of institutions that lose money, restate 
earnings, and face extensive regulatory scrutiny have received 
(and retained) substantial compensation packages. After being 
forced out of Fannie Mae because the company used faulty 
accounting--resulting in a multi-billion dollar restatement--
former Fannie Mae CEO Franklin Raines may receive a pension 
worth roughly $1.4 million per year for life and prorated 
portions of incentive stock awards that could be worth millions 
of dollars.\4\ Most recently, Home Depot CEO Robert Nardelli, 
who was paid millions over the course of a six-year tenure when 
the company's stock price fell 7.9 percent, left with a $210 
million separation package.\5\
---------------------------------------------------------------------------
    \4\ See, ``Fannie Mae Exit Packages Face Review,'' Washington Post, 
Dec. 23, 2004.
    \5\ ``Home Depot Chief's Pay in 2007 Could Reach $8.9 Million,'' 
New York Times, Jan. 25, 2007.
---------------------------------------------------------------------------
    Securities and Exchange Commission Compensation 
Disclosures. Last year, the Securities and Exchange Commission 
revised its disclosure rules to require that public companies 
provide more disclosure of executive compensation than had 
previously been the case. After overwhelming response (over 
20,000 comments), the SEC's final rules require that companies 
disclose to shareholders, in plain English and significantly 
greater detail, their executive compensation practices. In 
particular, it requires greater disclosure of the company's 
compensation plans for the CEO, CFO and highest paid executive 
officers and board members.
    Although the SEC's executive compensation rules were 
considered by many to have made substantial progress on 
disclosure, some have noted that it did not (1) provide any new 
tools for owners to tailor/improve their company's compensation 
approach; nor (2) change the fundamental relationship between 
CEOs and Boards that gives rise to high CEO pay: in general, 
management (CEOs) select the Boards that set CEO pay.
    Shareholder Vote on Executive Compensation Act. Building 
off the new SEC disclosures, H.R. 1257, ``The Shareholder Vote 
on Executive Compensation Act'' would require that public 
companies ensure that shareholders have:
    1. an annual nonbinding advisory vote on their company's 
executive compensation disclosures; and
    2. an additional nonbinding advisory vote if the company 
awards a new golden parachute package while simultaneously 
negotiating the purchase or sale of the company.
    This second vote is designed to help address a CEO's 
natural conflict of interest when negotiating the selling price 
of a company while simultaneously negotiating an additional 
personal exit package (e.g., as noted above, a CEO may be 
willing to sell the company for less if he/she personally 
receives more--thereby reducing shareholder value). This 
provision would not apply to long disclosed ``change in 
ownership'' agreements--and would only apply to new provisions 
added while negotiating the sale/purchase.
    The nonbinding advisory vote will give shareholders a 
mechanism for supporting or opposing a company's executive 
compensation plan without micromanaging the company. Knowing 
that they will be subject to some collective shareholder action 
will help give boards pause before approving questionable 
compensation plans.
    The nonbinding advisory vote approach has been used in the 
United Kingdom since 2003 and is now used in Australia as well. 
The policy change is credited with improving management/
shareholder dialogue on executive compensation matters and 
increasing the use of long-term performance targets in 
incentive compensation.\6\ It was recently adopted voluntarily 
by Aflac, and is currently pending before numerous U.S. public 
companies.
---------------------------------------------------------------------------
    \6\ See, e.g., ``Global Investor Support for Advisory Shareholder 
Votes on Executive Compensation,'' Letter to SEC Chairman Chris Cox, 
Jan. 25, 2007.
---------------------------------------------------------------------------

                                Hearings

    The Committee on Financial Services held a hearing on March 
8, 2007, titled ``Empowering Shareholders on Executive 
Compensation: H.R. 1257, The Shareholder Vote on Executive 
Compensation Act.'' The following witnesses testified:
           Lucian Bebchuk, Professor, Harvard Law 
        School;
           John J. Castellani, President, Business 
        Roundtable;
           Stephen M. Davis, Fellow, Millstein Center 
        for Governance and Performance;
           Richard Ferlauto, Director of Pension and 
        Benefit Policy, American Federation of State, County, 
        and Municipal Employees (AFSCME);
           Steven N. Kaplan, Neubauer Family Professor 
        of Entrepreneurship and Finance, University of Chicago 
        Graduate School of Business; and
           Nell Minow, Editor, the Corporate Library.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
March 21 and 22, 2007, and on March 28, 2007, ordered H.R. 1257 
reported, as amended, with a favorable recommendation by a 
record vote of 37 yeas and 29 nays.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. A 
motion by Mr. Frank to report the bill, as amended, to the 
House with a favorable recommendation was agreed to by a record 
vote of 37 yeas and 29 nays (Record vote FC-26). The names of 
Members voting for and against follow:

                                              RECORD VOTE NO. FC-26
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................        X   ........  .........  Mr. Bachus.......  ........        X   .........
Mr. Kanjorski..................  ........  ........  .........  Mr. Baker........  ........  ........  .........
Ms. Waters.....................        X   ........  .........  Ms. Pryce (OH)...  ........        X   .........
Mrs. Maloney...................        X   ........  .........  Mr. Castle.......  ........        X   .........
Mr. Gutierrez..................        X   ........  .........  Mr. King (NY)....  ........        X   .........
Ms. Velazquez..................        X   ........  .........  Mr. Royce........  ........        X   .........
Mr. Watt.......................        X   ........  .........  Mr. Lucas........  ........        X   .........
Mr. Ackerman...................        X   ........  .........  Mr. Paul.........  ........        X   .........
Ms. Carson.....................        X   ........  .........  Mr. Gillmor......        X   ........  .........
Mr. Sherman....................        X   ........  .........  Mr. LaTourette...  ........        X   .........
Mr. Meeks......................        X   ........  .........  Mr. Manzullo.....  ........        X   .........
Mr. Moore (KS).................        X   ........  .........  Mr. Jones........        X   ........  .........
Mr. Capuano....................        X   ........  .........  Mrs. Biggert.....  ........        X   .........
Mr. Hinojosa...................        X   ........  .........  Mr. Shays........  ........        X   .........
Mr. Clay.......................        X   ........  .........  Mr. Miller (CA)..  ........        X   .........
Mrs. McCarthy..................        X   ........  .........  Mrs. Capito......  ........        X   .........
Mr. Baca.......................        X   ........  .........  Mr. Feeney.......  ........        X   .........
Mr. Lynch......................        X   ........  .........  Mr. Hensarling...  ........        X   .........
Mr. Miller (NC)................        X   ........  .........  Mr. Garrett (NJ).  ........        X   .........
Mr. Scott......................        X   ........  .........  Ms. Brown-Waite..  ........        X   .........
Mr. Green......................        X   ........  .........  Mr. Barrett (SC).  ........        X   .........
Mr. Cleaver....................        X   ........  .........  Mr. Renzi........  ........        X   .........
Ms. Bean.......................        X   ........  .........  Mr. Gerlach......  ........        X   .........
Ms. Moore (WI).................        X   ........  .........  Mr. Pearce.......  ........        X   .........
Mr. Davis (TN).................        X   ........  .........  Mr. Neugebauer...  ........        X   .........
Mr. Sires......................        X   ........  .........  Mr. Price (GA)...  ........        X   .........
Mr. Hodes......................        X   ........  .........  Mr. Davis (KY)...  ........        X   .........
Mr. Ellison....................        X   ........  .........  Mr. McHenry......  ........        X   .........
Mr. Klein......................        X   ........  .........  Mr. Campbell.....  ........        X   .........
Mr. Mahoney (FL)...............        X   ........  .........  Mr. Putnam.......  ........        X   .........
Mr. Wilson.....................        X   ........  .........  Mrs. Bachmann....  ........        X   .........
Mr. Perlmutter.................        X   ........  .........  Mr. Roskam.......  ........        X   .........
Mr. Murphy.....................        X   ........  .........  Mr. Marchant.....  ........  ........  .........
Mr. Donnelly...................        X   ........  .........
Mr. Wexler.....................        X   ........  .........
Mr. Marshall...................        X   ........  .........
Mr. Boren......................  ........  ........  .........
----------------------------------------------------------------------------------------------------------------

    The following amendments were disposed of by record votes. 
The names of Members voting for and against follow:
    An amendment in the nature of a substitute, by Mr. Price 
(GA), No. 4, was not agreed to by a record vote of 26 yeas and 
35 nays (Record vote FC-14):

                                              RECORD VOTE NO. FC-14
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........  ........  .........  Mr. Baker........  ........  ........  .........
Ms. Waters.....................  ........        X   .........  Ms. Pryce (OH)...        X   ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Castle.......        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. King (NY)....        X   ........  .........
Ms. Velazquez..................  ........        X   .........  Mr. Royce........        X   ........  .........
Mr. Watt.......................  ........        X   .........  Mr. Lucas........        X   ........  .........
Mr. Ackerman...................  ........        X   .........  Mr. Paul.........        X   ........  .........
Ms. Carson.....................  ........        X   .........  Mr. Gillmor......  ........  ........  .........
Mr. Sherman....................  ........        X   .........  Mr. LaTourette...        X   ........  .........
Mr. Meeks......................  ........        X   .........  Mr. Manzullo.....        X   ........  .........
Mr. Moore (KS).................  ........        X   .........  Mr. Jones........  ........        X   .........
Mr. Capuano....................  ........        X   .........  Mrs. Biggert.....        X   ........  .........
Mr. Hinojosa...................  ........        X   .........  Mr. Shays........        X   ........  .........
Mr. Clay.......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Baca.......................  ........  ........  .........  Mr. Feeney.......        X   ........  .........
Mr. Lynch......................  ........        X   .........  Mr. Hensarling...  ........  ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Scott......................  ........        X   .........  Ms. Brown-Waite..        X   ........  .........
Mr. Green......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mr. Renzi........  ........  ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. Pearce.......        X   ........  .........
Mr. Davis (TN).................  ........  ........  .........  Mr. Neugebauer...        X   ........  .........
Mr. Sires......................  ........        X   .........  Mr. Price (GA)...        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. Davis (KY)...        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. McHenry......        X   ........  .........
Mr. Klein......................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Mahoney (FL)...............  ........        X   .........  Mr. Putnam.......  ........  ........  .........
Mr. Wilson.....................  ........        X   .........  Mrs.Bachmann.....        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Roskam.......  ........  ........  .........
Mr. Murphy.....................  ........        X   .........  Mr. Marchant.....        X   ........  .........
Mr. Donnelly...................  ........        X   .........
Mr. Wexler.....................  ........        X   .........
Mr. Marshall...................  ........        X   .........
Mr. Boren......................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Feeney, No. 5, providing that the cost 
of a shareholder vote be borne by requesting shareholder in 
certain circumstances, was not agreed to by a record vote of 28 
yeas, 36 nays, and 1 present (Record vote FC-15):

                                              RECORD VOTE NO. FC-15
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative       Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus........        X   ........  ........
Mr. Kanjorski..................  ........  ........  .........  Mr. Baker.........        X   ........  ........
Ms. Waters.....................  ........        X   .........  Ms. Pryce (OH)....        X   ........  ........
Mrs. Maloney...................  ........        X   .........  Mr. Castle........        X   ........  ........
Mr. Gutierrez..................  ........        X   .........  Mr. King (NY).....        X   ........  ........
Ms. Velazquez..................  ........        X   .........  Mr. Royce.........        X   ........  ........
Mr. Watt.......................  ........        X   .........  Mr. Lucas.........        X   ........  ........
Mr. Ackerman...................  ........        X   .........  Mr. Paul..........        X   ........  ........
Ms. Carson.....................  ........        X   .........  Mr. Gillmor.......  ........        X   ........
Mr. Sherman....................  ........        X   .........  Mr. LaTourette....        X   ........  ........
Mr. Meeks......................  ........        X   .........  Mr. Manzullo......        X   ........  ........
Mr. Moore (KS).................  ........        X   .........  Mr. Jones.........        X   ........  ........
Mr. Capuano....................  ........        X   .........  Mrs. Biggert......  ........  ........        X
Mr. Hinojosa...................  ........        X   .........  Mr. Shays.........  ........  ........  ........
Mr. Clay.......................  ........        X   .........  Mr. Miller (CA)...        X   ........  ........
Mrs. McCarthy..................  ........        X   .........  Mrs. Capito.......        X   ........  ........
Mr. Baca.......................  ........  ........  .........  Mr. Feeney........        X   ........  ........
Mr. Lynch......................  ........        X   .........  Mr. Hensarling....  ........  ........  ........
Mr. Miller (NC)................  ........        X   .........  Mr. Garrett (NJ)..        X   ........  ........
Mr. Scott......................  ........        X   .........  Ms. Brown-Waite...  ........        X   ........
Mr. Green......................  ........        X   .........  Mr. Barrett (SC)..        X   ........  ........
Mr. Cleaver....................  ........        X   .........  Mr. Renzi.........        X   ........  ........
Ms. Bean.......................  ........        X   .........  Mr. Gerlach.......        X   ........  ........
Ms. Moore (WI).................  ........        X   .........  Mr. Pearce........        X   ........  ........
Mr. Davis (TN).................  ........  ........  .........  Mr. Neugebauer....        X   ........  ........
Mr. Sires......................  ........        X   .........  Mr. Price (GA)....        X   ........  ........
Mr. Hodes......................  ........        X   .........  Mr. Davis (KY)....        X   ........  ........
Mr. Ellison....................  ........        X   .........  Mr. McHenry.......        X   ........  ........
Mr. Klein......................  ........        X   .........  Mr. Campbell......        X   ........  ........
Mr. Mahoney (FL)...............  ........        X   .........  Mr. Putnam........        X   ........  ........
Mr. Wilson.....................  ........        X   .........  Mrs. Bachmann.....        X   ........  ........
Mr. Perlmutter.................  ........        X   .........  Mr. Roskam........        X   ........  ........
Mr. Murphy.....................  ........        X   .........  Mr. Marchant......        X   ........  ........
Mr. Donnelly...................  ........        X   .........
Mr. Wexler.....................  ........        X   .........
Mr. Marshall...................  ........        X   .........
Mr. Boren......................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Pearce, No. 6, on compensation to non-
executives paid over $1 million, was not agreed to by a record 
vote of 15 yeas, 47 nays, and 4 present (Record vote FC-16):

                                              RECORD VOTE NO. FC-16
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......  ........        X   .........
Mr. Kanjorski..................  ........  ........  .........  Mr. Baker........  ........  ........  .........
Ms. Waters.....................  ........        X   .........  Ms. Pryce (OH)...  ........        X   .........
Mrs. Maloney...................  ........        X   .........  Mr. Castle.......  ........        X   .........
Mr. Gutierrez..................  ........        X   .........  Mr. King (NY)....  ........        X   .........
Ms. Velazquez..................  ........        X   .........  Mr. Royce........  ........        X   .........
Mr. Watt.......................  ........        X   .........  Mr. Lucas........  ........        X   .........
Mr. Ackerman...................  ........        X   .........  Mr. Paul.........  ........        X   .........
Ms. Carson.....................  ........        X   .........  Mr. Gillmor......  ........        X   .........
Mr. Sherman....................  ........        X   .........  Mr. LaTourette...  ........        X   .........
Mr. Meeks......................  ........        X   .........  Mr. Manzullo.....  ........        X   .........
Mr. Moore (KS).................  ........        X   .........  Mr. Jones........  ........        X   .........
Mr. Capuano....................  ........        X   .........  Mrs. Biggert.....  ........  ........         X
Mr. Hinojosa...................  ........        X   .........  Mr. Shays........        X   ........  .........
Mr. Clay.......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mrs. Capito......  ........        X   .........
Mr. Baca.......................  ........  ........  .........  Mr. Feeney.......  ........  ........         X
Mr. Lynch......................  ........        X   .........  Mr. Hensarling...  ........  ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. Garrett (NJ).  ........  ........         X
Mr. Scott......................  ........        X   .........  Ms. Brown-Waite..  ........  ........         X
Mr. Green......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mr. Renzi........        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. Pearce.......        X   ........  .........
Mr. Davis (TN).................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Sires......................  ........        X   .........  Mr. Price (GA)...        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. Davis (KY)...        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. McHenry......        X   ........  .........
Mr. Klein......................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Mahoney (FL)...............  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Roskam.......        X   ........  .........
Mr. Murphy.....................  ........        X   .........  Mr. Marchant.....        X   ........  .........
Mr. Donnelly...................  ........        X   .........
Mr. Wexler.....................  ........        X   .........
Mr. Marshall...................  ........        X   .........
Mr. Boren......................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Pearce, No. 7, regarding compensation 
to individuals making over $1 million, was not agreed to by a 
record vote of 11 yeas, 52 nays, and 2 present (Record note FC-
17):

                                              RECORD VOTE NO. FC-17
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......  ........        X   .........
Mr. Kanjorski..................  ........  ........  .........  Mr. Baker........  ........  ........  .........
Ms. Waters.....................  ........        X   .........  Ms. Pryce (OH)...  ........        X   .........
Mrs. Maloney...................  ........        X   .........  Mr. Castle.......  ........        X   .........
Mr. Gutierrez..................  ........        X   .........  Mr. King (NY)....  ........        X   .........
Ms. Velazquez..................  ........        X   .........  Mr. Royce........  ........        X   .........
Mr. Watt.......................  ........        X   .........  Mr. Lucas........  ........        X   .........
Mr. Ackerman...................  ........        X   .........  Mr. Paul.........  ........        X   .........
Ms. Carson.....................  ........        X   .........  Mr. Gillmor......  ........        X   .........
Mr. Sherman....................  ........        X   .........  Mr. LaTourette...  ........        X   .........
Mr. Meeks......................  ........        X   .........  Mr. Manzullo.....  ........        X   .........
Mr. Moore (KS).................  ........        X   .........  Mr. Jones........  ........        X   .........
Mr. Capuano....................  ........        X   .........  Mrs. Biggert.....  ........  ........         X
Mr. Hinojosa...................  ........        X   .........  Mr. Shays........  ........        X   .........
Mr. Clay.......................  ........        X   .........  Mr. Miller (CA)..  ........        X   .........
Mrs. McCarthy..................  ........        X   .........  Mrs. Capito......  ........        X   .........
Mr. Baca.......................  ........  ........  .........  Mr. Feeney.......  ........  ........         X
Mr. Lynch......................  ........        X   .........  Mr. Hensarling...  ........  ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. Garrett (NJ).  ........  ........  .........
Mr. Scott......................  ........        X   .........  Ms. Brown-Waite..  ........        X   .........
Mr. Green......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mr. Renzi........        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Gerlach......  ........        X   .........
Ms. Moore (WI).................  ........        X   .........  Mr. Pearce.......        X   ........  .........
Mr. Davis (TN).................  ........        X   .........  Mr. Neugebauer...  ........        X   .........
Mr. Sires......................  ........        X   .........  Mr. Price (GA)...        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. Davis (KY)...        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. McHenry......        X   ........  .........
Mr. Klein......................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Mahoney (FL)...............  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Roskam.......        X   ........  .........
Mr. Murphy.....................  ........        X   .........  Mr. Marchant.....        X   ........  .........
Mr. Donnelly...................  ........        X   .........
Mr. Wexler.....................  ........        X   .........
Mr. Marshall...................  ........        X   .........
Mr. Boren......................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Putnam, No. 8, on deferred compensation 
exemption, was not agreed to by a record vote of 28 yeas, 38 
nays, and 1 present (Record vote FC-18):

                                              RECORD VOTE NO. FC-18
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........  ........  .........  Mr. Baker........  ........  ........  .........
Ms. Waters.....................  ........        X   .........  Ms. Pryce (OH)...        X   ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Castle.......        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. King (NY)....        X   ........  .........
Ms. Velazquez..................  ........        X   .........  Mr. Royce........  ........        X   .........
Mr. Watt.......................  ........        X   .........  Mr. Lucas........        X   ........  .........
Mr. Ackerman...................  ........        X   .........  Mr. Paul.........        X   ........  .........
Ms. Carson.....................  ........        X   .........  Mr. Gillmor......        X   ........  .........
Mr. Sherman....................  ........        X   .........  Mr. LaTourette...        X   ........  .........
Mr. Meeks......................  ........        X   .........  Mr. Manzullo.....        X   ........  .........
Mr. Moore (KS).................  ........        X   .........  Mr. Jones........        X   ........  .........
Mr. Capuano....................  ........        X   .........  Mrs. Biggert.....  ........  ........         X
Mr. Hinojosa...................  ........        X   .........  Mr. Shays........        X   ........  .........
Mr. Clay.......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Feeney.......        X   ........  .........
Mr. Lynch......................  ........        X   .........  Mr. Hensarling...  ........  ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Scott......................  ........        X   .........  Ms. Brown-Waite..  ........        X   .........
Mr. Green......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mr. Renzi........        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. Pearce.......        X   ........  .........
Mr. Davis (TN).................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Sires......................  ........        X   .........  Mr. Price (GA)...        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. Davis (KY)...        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. McHenry......        X   ........  .........
Mr. Klein......................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Mahoney (FL)...............  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Roskam.......        X   ........  .........
Mr. Murphy.....................  ........        X   .........  Mr. Marchant.....        X   ........  .........
Mr. Donnelly...................  ........        X   .........
Mr. Wexler.....................  ........        X   .........
Mr. Marshall...................  ........        X   .........
Mr. Boren......................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Campbell, No. 9, on majority-elected 
board exemption, was not agreed to by a record vote of 29 yeas, 
37 nays, and 1 present (Record vote FC-19):

                                              RECORD VOTE NO. FC-19
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........  ........  .........  Mr. Baker........  ........  ........  .........
Ms. Waters.....................  ........        X   .........  Ms. Pryce (OH)...        X   ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Castle.......        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. King (NY)....        X   ........  .........
Ms. Velazquez..................  ........        X   .........  Mr. Royce........        X   ........  .........
Mr. Watt.......................  ........        X   .........  Mr. Lucas........        X   ........  .........
Mr. Ackerman...................  ........        X   .........  Mr. Paul.........        X   ........  .........
Ms. Carson.....................  ........        X   .........  Mr. Gillmor......  ........        X   .........
Mr. Sherman....................  ........        X   .........  Mr. LaTourette...        X   ........  .........
Mr. Meeks......................  ........        X   .........  Mr. Manzullo.....        X   ........  .........
Mr. Moore (KS).................  ........        X   .........  Mr. Jones........        X   ........  .........
Mr. Capuano....................  ........        X   .........  Mrs. Biggert.....  ........  ........         X
Mr. Hinojosa...................  ........        X   .........  Mr. Shays........        X   ........  .........
Mr. Clay.......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Feeney.......        X   ........  .........
Mr. Lynch......................  ........        X   .........  Mr. Hensarling...  ........  ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Scott......................  ........        X   .........  Ms. Brown-Waite..        X   ........  .........
Mr. Green......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mr. Renzi........        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. Pearce.......        X   ........  .........
Mr. Davis (TN).................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Sires......................  ........        X   .........  Mr. Price (GA)...        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. Davis (KY)...        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. McHenry......        X   ........  .........
Mr. Klein......................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Mahoney (FL)...............  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Roskam.......        X   ........  .........
Mr. Murphy.....................  ........        X   .........  Mr. Marchant.....        X   ........  .........
Mr. Donnelly...................  ........        X   .........
Mr. Wexler.....................  ........        X   .........
Mr. Marshall...................  ........        X   .........
Mr. Boren......................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. McHenry, No. 11, on shareholder vote, 
was not agreed to by a record vote of 21 yeas, 45 nays, and 1 
present (Record vote FC-20):

                                              RECORD VOTE NO. FC-20
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........  ........  .........  Mr. Baker........  ........  ........  .........
Ms. Waters.....................  ........        X   .........  Ms. Pryce (OH)...        X   ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Castle.......        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. King (NY)....        X   ........  .........
Ms. Velazquez..................  ........        X   .........  Mr. Royce........  ........        X   .........
Mr. Watt.......................  ........        X   .........  Mr. Lucas........        X   ........  .........
Mr. Ackerman...................  ........        X   .........  Mr. Paul.........  ........        X   .........
Ms. Carson.....................  ........        X   .........  Mr. Gillmor......  ........  ........  .........
Mr. Sherman....................  ........        X   .........  Mr. LaTourette...  ........        X   .........
Mr. Meeks......................  ........        X   .........  Mr. Manzullo.....        X   ........  .........
Mr. Moore (KS).................  ........        X   .........  Mr. Jones........  ........        X   .........
Mr. Capuano....................  ........        X   .........  Mrs. Biggert.....  ........  ........         X
Mr. Hinojosa...................  ........        X   .........  Mr. Shays........  ........        X   .........
Mr. Clay.......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Feeney.......        X   ........  .........
Mr. Lynch......................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Scott......................  ........        X   .........  Ms. Brown-Waite..  ........        X   .........
Mr. Green......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mr. Renzi........        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Gerlach......  ........        X   .........
Ms. Moore (WI).................  ........        X   .........  Mr. Pearce.......        X   ........  .........
Mr. Davis (TN).................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Sires......................  ........        X   .........  Mr. Price (GA)...        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. Davis (KY)...        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. McHenry......        X   ........  .........
Mr. Klein......................  ........        X   .........  Mr. Campbell.....  ........        X   .........
Mr. Mahoney (FL)...............  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Roskam.......  ........        X   .........
Mr. Murphy.....................  ........        X   .........  Mr. Marchant.....        X   ........  .........
Mr. Donnelly...................  ........        X   .........
Mr. Wexler.....................  ........        X   .........
Mr. Marshall...................  ........        X   .........
Mr. Boren......................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. McHenry, No. 12, on disclosure of vote 
to pension fund beneficiaries, was not agreed to by a record 
vote of 26 yeas, 39 nays, and 1 present (Record vote FC-21):

                                              RECORD VOTE NO. FC-21
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........  ........  .........  Mr. Baker........  ........  ........  .........
Ms. Waters.....................  ........        X   .........  Ms. Pryce (OH)...        X   ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Castle.......        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. King (NY)....        X   ........  .........
Ms. Velazquez..................  ........        X   .........  Mr. Royce........  ........        X   .........
Mr. Watt.......................  ........        X   .........  Mr. Lucas........        X   ........  .........
Mr. Ackerman...................  ........        X   .........  Mr. Paul.........  ........        X   .........
Ms. Carson.....................  ........        X   .........  Mr. Gillmor......  ........  ........  .........
Mr. Sherman....................  ........        X   .........  Mr. LaTourette...        X   ........  .........
Mr. Meeks......................  ........        X   .........  Mr. Manzullo.....        X   ........  .........
Mr. Moore (KS).................  ........        X   .........  Mr. Jones........        X   ........  .........
Mr. Capuano....................  ........        X   .........  Mrs. Biggert.....  ........  ........         X
Mr. Hinojosa...................  ........        X   .........  Mr. Shays........        X   ........  .........
Mr. Clay.......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Feeney.......        X   ........  .........
Mr. Lynch......................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Scott......................  ........        X   .........  Ms. Brown-Waite..        X   ........  .........
Mr. Green......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mr. Renzi........        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. Pearce.......  ........  ........  .........
Mr. Davis (TN).................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Sires......................  ........        X   .........  Mr. Price (GA)...        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. Davis (KY)...        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. McHenry......        X   ........  .........
Mr. Klein......................  ........        X   .........  Mr. Campbell.....  ........        X   .........
Mr. Mahoney (FL)...............  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Roskam.......        X   ........  .........
Mr. Murphy.....................  ........        X   .........  Mr. Marchant.....        X   ........  .........
Mr. Donnelly...................  ........        X   .........
Mr. Wexler.....................  ........        X   .........
Mr. Marshall...................  ........        X   .........
Mr. Boren......................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Garrett, No. 13, setting conditions 
triggering a vote, was not agreed to by a record vote of 28 
yeas, 39 nays, and 1 present (Record vote FC-22):

                                              RECORD VOTE NO. FC-22
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........  ........  .........  Mr. Baker........  ........  ........  .........
Ms. Waters.....................  ........        X   .........  Ms. Pryce (OH)...        X   ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Castle.......        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. King (NY)....        X   ........  .........
Ms. Velazquez..................  ........        X   .........  Mr. Royce........        X   ........  .........
Mr. Watt.......................  ........        X   .........  Mr. Lucas........        X   ........  .........
Mr. Ackerman...................  ........        X   .........  Mr. Paul.........        X   ........  .........
Ms. Carson.....................  ........        X   .........  Mr. Gillmor......  ........        X   .........
Mr. Sherman....................  ........        X   .........  Mr. LaTourette...        X   ........  .........
Mr. Meeks......................  ........        X   .........  Mr. Manzullo.....  ........        X   .........
Mr. Moore (KS).................  ........        X   .........  Mr. Jones........  ........        X   .........
Mr. Capuano....................  ........        X   .........  Mrs. Biggert.....  ........  ........         X
Mr. Hinojosa...................  ........        X   .........  Mr. Shays........        X   ........  .........
Mr. Clay.......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Feeney.......        X   ........  .........
Mr. Lynch......................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Scott......................  ........        X   .........  Ms. Brown-Waite..        X   ........  .........
Mr. Green......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mr. Renzi........        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. Pearce.......        X   ........  .........
Mr. Davis (TN).................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Sires......................  ........        X   .........  Mr. Price (GA)...        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. Davis (KY)...        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. McHenry......        X   ........  .........
Mr. Klein......................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Mahoney (FL)...............  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Roskam.......        X   ........  .........
Mr. Murphy.....................  ........        X   .........  Mr. Marchant.....        X   ........  .........
Mr. Donnelly...................  ........        X   .........
Mr. Wexler.....................  ........        X   .........
Mr. Marshall...................  ........        X   .........
Mr. Boren......................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Garrett, No. 14, setting conditions 
triggering a vote, was not agreed to by a record vote of 28 
yeas, 39 nays, and 1 present (Record vote FC-23):

                                              RECORD VOTE NO. FC-23
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........  ........  .........  Mr. Baker........  ........  ........  .........
Ms. Waters.....................  ........        X   .........  Ms. Pryce (OH)...        X   ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Castle.......        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. King (NY)....        X   ........  .........
Ms. Velazquez..................  ........        X   .........  Mr. Royce........        X   ........  .........
Mr. Watt.......................  ........        X   .........  Mr. Lucas........        X   ........  .........
Mr. Ackerman...................  ........        X   .........  Mr. Paul.........        X   ........  .........
Ms. Carson.....................  ........        X   .........  Mr. Gillmor......  ........        X   .........
Mr. Sherman....................  ........        X   .........  Mr. LaTourette...        X   ........  .........
Mr. Meeks......................  ........        X   .........  Mr. Manzullo.....  ........        X   .........
Mr. Moore (KS).................  ........        X   .........  Mr. Jones........  ........        X   .........
Mr. Capuano....................  ........        X   .........  Mrs. Biggert.....  ........  ........         X
Mr. Hinojosa...................  ........        X   .........  Mr. Shays........        X   ........  .........
Mr. Clay.......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Feeney.......        X   ........  .........
Mr. Lynch......................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Scott......................  ........        X   .........  Ms. Brown-Waite..        X   ........  .........
Mr. Green......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mr. Renzi........        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. Pearce.......        X   ........  .........
Mr. Davis (TN).................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Sires......................  ........        X   .........  Mr. Price (GA)...        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. Davis (KY)...        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. McHenry......        X   ........  .........
Mr. Klein......................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Mahoney (FL)...............  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Roskam.......        X   ........  .........
Mr. Murphy.....................  ........        X   .........  Mr. Marchant.....        X   ........  .........
Mr. Donnelly...................  ........        X   .........
Mr. Wexler.....................  ........        X   .........
Mr. Marshall...................  ........        X   .........
Mr. Boren......................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Price (GA), No. 15, ensuring fair 
competition and level playing field, was not agreed to by a 
record vote of 27 yeas, 32 nays, and 1 present (Record vote FC-
24):

                                              RECORD VOTE NO. FC-24
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........  ........  .........  Mr. Baker........  ........  ........  .........
Ms. Waters.....................  ........        X   .........  Ms. Pryce (OH)...        X   ........  .........
Mrs. Maloney...................  ........  ........  .........  Mr. Castle.......        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. King (NY)....        X   ........  .........
Ms. Velazquez..................  ........        X   .........  Mr. Royce........        X   ........  .........
Mr. Watt.......................  ........        X   .........  Mr. Lucas........        X   ........  .........
Mr. Ackerman...................  ........        X   .........  Mr. Paul.........        X   ........  .........
Ms. Carson.....................  ........        X   .........  Mr. Gillmor......        X   ........  .........
Mr. Sherman....................  ........        X   .........  Mr. LaTourette...        X   ........  .........
Mr. Meeks......................  ........        X   .........  Mr. Manzullo.....  ........  ........  .........
Mr. Moore (KS).................  ........        X   .........  Mr. Jones........        X   ........  .........
Mr. Capuano....................  ........        X   .........  Mrs. Biggert.....  ........  ........         X
Mr. Hinojosa...................  ........        X   .........  Mr. Shays........  ........  ........  .........
Mr. Clay.......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Feeney.......        X   ........  .........
Mr. Lynch......................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Scott......................  ........        X   .........  Ms. Brown-Waite..        X   ........  .........
Mr. Green......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mr. Renzi........        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. Pearce.......        X   ........  .........
Mr. Davis (TN).................  ........        X   .........  Mr. Neugebauer...  ........  ........  .........
Mr. Sires......................  ........        X   .........  Mr. Price (GA)...        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. Davis (KY)...  ........        X   .........
Mr. Ellison....................  ........        X   .........  Mr. McHenry......  ........        X   .........
Mr. Klein......................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Mahoney (FL)...............  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mrs.Bachmann.....        X   ........  .........
Mr. Perlmutter.................  ........  ........  .........  Mr. Roskam.......        X   ........  .........
Mr. Murphy.....................  ........        X   .........  Mr. Marchant.....  ........  ........  .........
Mr. Donnelly...................  ........  ........  .........
Mr. Wexler.....................  ........        X   .........
Mr. Marshall...................  ........        X   .........
Mr. Boren......................  ........  ........  .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Price, No. 16, providing relief from 
cost of new burdensome regulation, was not agreed to by a 
record vote of 20 yeas, 42 nays, and 1 present (Record vote FC-
25):

                                              RECORD VOTE NO. FC-25
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......  ........        X   .........
Mr. Kanjorski..................  ........  ........  .........  Mr. Baker........  ........  ........  .........
Ms. Waters.....................  ........        X   .........  Ms. Pryce (OH)...        X   ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Castle.......        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. King (NY)....  ........        X   .........
Ms. Velazquez..................  ........        X   .........  Mr. Royce........  ........        X   .........
Mr. Watt.......................  ........        X   .........  Mr. Lucas........  ........  ........  .........
Mr. Ackerman...................  ........        X   .........  Mr. Paul.........  ........        X   .........
Ms. Carson.....................  ........        X   .........  Mr. Gillmor......  ........        X   .........
Mr. Sherman....................  ........        X   .........  Mr. LaTourette...  ........        X   .........
Mr. Meeks......................  ........        X   .........  Mr. Manzullo.....  ........        X   .........
Mr. Moore (KS).................  ........        X   .........  Mr. Jones........  ........        X   .........
Mr. Capuano....................  ........        X   .........  Mrs. Biggert.....  ........  ........         X
Mr. Hinojosa...................  ........        X   .........  Mr. Shays........  ........  ........  .........
Mr. Clay.......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Feeney.......        X   ........  .........
Mr. Lynch......................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Scott......................  ........        X   .........  Ms. Brown-Waite..        X   ........  .........
Mr. Green......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mr. Renzi........        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. Pearce.......        X   ........  .........
Mr. Davis (TN).................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Sires......................  ........        X   .........  Mr. Price (GA)...        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. Davis (KY)...        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. McHenry......        X   ........  .........
Mr. Klein......................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Mahoney (FL)...............  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Mr. Perlmutter.................  ........  ........  .........  Mr. Roskam.......        X   ........  .........
Mr. Murphy.....................  ........        X   .........  Mr. Marchant.....  ........  ........  .........
Mr. Donnelly...................  ........        X   .........
Mr. Wexler.....................  ........        X   .........
Mr. Marshall...................  ........        X   .........
Mr. Boren......................  ........  ........  .........
----------------------------------------------------------------------------------------------------------------

    The following other amendments were also considered by the 
Committee:
    An amendment by Mr. Frank, No. 1, delaying votes to 2009 
and providing a rule of construction, was agreed to, as 
amended, by voice vote.
    An amendment by Mr. Shays, No. 1(a), to the amendment by 
Mr. Frank, regarding fiduciary duty by such board, was agreed 
to by voice vote.
    An amendment by Mr. Roskam, No. 2, on additional 
disclosures, was offered and withdrawn.
    An amendment by Mr. Price, No. 3, ensuring fair competition 
and level playing field, was offered and withdrawn.
    An amendment by Mr. McHenry, No. 10, on votes cast on 
behalf of pension funds, had a point of order sustained against 
its consideration.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has held hearings and 
made findings that are reflected in this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    The goal of H.R. 1257, the Shareholder Vote on Executive 
Compensation Act, is to provide shareholders with a meaningful 
say on their company's executive compensation practices without 
setting any caps on executive pay or micromanaging the company. 
It will do this by (1) requiring that public companies include 
in their annual proxy a nonbinding shareholder vote on the 
executive compensation disclosures already required by the 
Securities and Exchange Commission; and (2) requiring a 
separate shareholder vote for additional compensation that is 
tied to the sale or purchase of a company.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, April 13, 2007.
Hon. Barney Frank,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1257, the 
Shareholder Vote on Executive Compensation Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susan Willie.
            Sincerely,
                                           Peter R. Orszag,
                                                          Director.
    Enclosure.

H.R. 1257--Shareholder Vote on Executive Compensation Act

    H.R. 1257 would require all companies that trade stock on 
public exchanges to allow shareholders to vote annually to 
approve the compensation received by executives. Additionally, 
public companies, in the event of a proposed sale, acquisition, 
merger, or consolidation, would be required to allow 
shareholders to vote on compensation agreements between the 
entity acquiring the company and principal executive officers 
of the company to be acquired. In either case, the results of 
the shareholder votes would not be binding on the board of 
directors, and would apply only to shareholders' meetings 
occurring on or after January 1, 2009. The bill would require 
the Securities and Exchange Commission (SEC) to develop 
regulations to implement the bill's requirements.
    Based on information from the SEC, CBO estimates that 
implementing H.R. 1257 would cost about $1 million in 2008 to 
develop regulations, and less than $500,000 per year thereafter 
to review and monitor compliance by companies affected by the 
regulations. Such spending would be subject to the availability 
of appropriated funds; enacting the bill would not affect 
direct spending or receipts.
    H.R. 1257 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) and would not affect 
the budgets of state, local, or tribal governments.
    H.R. 1257 would impose private-sector mandates, as defined 
in UMRA, on publicly traded companies and entities making 
certain proposals by proxy solicitation. The bill would require 
them, beginning on January 1, 2009, to allow a nonbinding vote 
by shareholders on certain executive compensation and to make 
certain disclosures related to such compensation. Based on 
information from industry and government sources, CBO estimates 
that the cost to comply with those mandates would fall below 
the annual threshold established by UMRA ($131 million in 2007, 
adjusted annually for inflation).
    According to government sources, about 6,000 publicly 
traded companies would be required to provide shareholder votes 
on executive compensation each year. The cost of the mandate 
would be the expenditure to cover any additional programming, 
paper, printing, postage, and tabulation to allow for the 
shareholder vote. Based on information from industry and 
government sources, CBO expects that the incremental cost to 
provide shareholder voting would fall well below the annual 
threshold for private-sector mandates.
    The bill also would require any entity making a proposal by 
proxy solicitation regarding an acquisition, merger, sale, or 
other disposition of substantially all the assets of an issuer, 
to disclose in the solicitation materials any agreements or 
understandings concerning any type of compensation, such as 
golden parachutes, related to the disposition. In addition, the 
bill would require those entities to allow a separate 
shareholder vote to approve such agreements or understandings 
in the proxy solicitation materials containing the disclosure. 
According to industry and government sources, such proxy 
solicitations occur infrequently. Therefore, CBO expects that 
the incremental cost for the industry to provide the 
disclosures and shareholder voting would be minimal.
    The CBO staff contacts for this estimate are Susan Willie 
(for federal costs) and Paige Piper/Bach (for the private-
sector impact). This estimate was approved by Peter H. 
Fontaine, Deputy Assistant Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
general welfare of the United States) and clause 3 (relating to 
the power to regulate interstate commerce).

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    H.R. 1257 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section establishes the short title of the bill, the 
``Shareholder Vote on Executive Compensation Act.''

Section 2. Shareholder vote on executive compensation disclosures

    This section requires that public companies include, in 
their annual proxies, a nonbinding shareholder vote on their 
executive compensation disclosures; and hold an additional 
nonbinding advisory vote if the company awards a new golden 
parachute package while simultaneously negotiating the purchase 
or sale of the company.
    The annual nonbinding advisory vote is designed to give 
shareholders a mechanism for supporting or opposing a company's 
executive compensation plan without micromanaging the company. 
Knowing that they will be subject to some collective 
shareholder action will help give boards more pause before 
approving a questionable compensation plan. As is the case in 
other countries, we expect this tool will improve dialogue 
between management and shareholders on compensation and make 
compensation a more efficient tool for improving/rewarding 
management performance.
    The rare second vote is designed to help address a CEO's 
natural conflict of interest when negotiating the price of a 
company while simultaneously negotiating an additional personal 
exit package (e.g., as noted above, a CEO may be willing to 
sell the company for less or pay more for another if he/she 
personally receives a larger package--thereby reducing 
shareholder value). This provision would not apply to long-
disclosed ``change in ownership'' agreements--and would only 
apply to new provisions added while negotiating the sale/
purchase.
    This section also clarifies that the results of the 
shareholder vote (e.g., approval or disapproval) will be 
nonbinding on a company's board or its shareholders. The 
results will create no new duties on the board nor be used to 
limit any other mechanisms available to shareholders such as to 
offer other executive compensation proposals on their company's 
proxy.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italics and existing law in which no change is 
proposed is shown in roman):

           SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934

SEC. 16. DIRECTORS, OFFICERS, AND PRINCIPAL STOCKHOLDERS.

  (a) * * *

           *       *       *       *       *       *       *

  (h) Annual Shareholder Approval of Executive Compensation.--
          (1) In general.-- Any proxy or consent or 
        authorization for an annual or other meeting of the 
        shareholders occurring on or after January 1, 2009, 
        shall permit a separate shareholder vote to approve the 
        compensation of executives as disclosed pursuant to the 
        Commission's compensation disclosure rules (which 
        disclosure shall include the compensation discussion 
        and analysis, the compensation tables, and any related 
        material). The shareholder vote shall not be binding on 
        the board of directors and shall not be construed as 
        overruling a decision by such board, nor to create or 
        imply any additional fiduciary duty by such board, nor 
        shall such vote be construed to restrict or limit the 
        ability of shareholders to make proposals for inclusion 
        in such proxy materials related to executive 
        compensation.
          (2) Shareholder approval of golden parachute 
        compensation.--
                  (A) Disclosure.-- In any proxy solicitation 
                material for an annual or other meeting of the 
                shareholders occurring on or after January 1, 
                2009, that concerns an acquisition, merger, 
                consolidation, or proposed sale or other 
                disposition of substantially all the assets of 
                an issuer, the person making such solicitation 
                shall disclose in the proxy solicitation 
                material, in a clear and simple form in 
                accordance with regulations of the Commission, 
                any agreements or understandings that such 
                person has with any principal executive 
                officers of such issuer (or of the acquiring 
                issuer, if such issuer is not the acquiring 
                issuer) concerning any type of compensation 
                (whether present, deferred, or contingent) that 
                are based on or otherwise relate to the 
                acquisition, merger, consolidation, sale, or 
                other disposition, and that have not been 
                subject to a shareholder vote under paragraph 
                (1).
                  (B) Shareholder approval.-- The proxy 
                solicitation material containing the disclosure 
                required by subparagraph (A) shall require a 
                separate shareholder vote to approve such 
                agreements or understandings. A vote by the 
                shareholders shall not be binding on the board 
                of directors and shall not be construed as 
                overruling a decision by such board, nor to 
                create or imply any additional fiduciary duty 
                by such board, nor shall such vote be construed 
                to restrict or limit the ability of 
                shareholders to make proposals for inclusion in 
                such proxy materials related to executive 
                compensation.

                     DISSENTING VIEWS ON H.R. 1257

    H.R. 1257 gives the Securities and Exchange Commission 
(SEC) the power to force publicly traded corporations to 
conduct shareholder votes on non-binding resolutions concerning 
the compensation packages of Chief Executive Officers (CEOs). 
Giving the SEC the power to require shareholder votes on any 
aspect of corporate governance--even on something as seemingly 
inconsequential as a non-binding resolution--illegitimately 
expands federal authority into questions of private governance.
    In a free market, shareholders who are concerned about CEO 
compensation are free to refuse to invest in corporations that 
do not provide sufficient information regarding how CEO 
salaries are set or do not allow shareholders a say in setting 
compensation packages. Since shareholders are corporations' 
owners, the CEO and board of directors have a great incentive 
to respond to shareholders' demands. In fact, several 
corporations have recently moved to amend the ways they 
determine executive compensation in order to provide increased 
transparency and accountability to shareholders.
    Some shareholders may not care about a CEO's compensation 
package; instead they may want to devote time at shareholders' 
meetings to reviewing corporate environmental polices or 
ensuring the corporation has ``family-friendly'' workforce 
policies. If H.R. 1257 becomes law, the concerns of those 
shareholders will take a back seat to corporations' attempts to 
meet the demands of Congress.
    It is ironic that Congress would concern itself with high 
salaries in the private sector when, according to data 
collected by the CATO Institute, federal employees, on average, 
make twice as much as their private sector counterparts. One of 
the examples of excessive compensation cited by the supporters 
of the bill is the multi-million dollar package paid to the 
former CEO of Freddie Mac. As a government sponsored enterprise 
that, along with its counterpart Fannie Mae, received almost 20 
billion dollars worth of indirect federal subsidies in fiscal 
year 2004 alone, Freddie Mac is hardly a poster child for the 
free market!
    Past government actions have made it more difficult for 
shareholders to hold CEOs and boards of directors accountable 
for disregarding shareholder interests by, among other things, 
wasting corporate resources on compensation packages and golden 
parachutes unrelated to performance. During the 1980s, so-
called corporate raiders helped keep corporate management 
accountable to shareholders through devices such as ``junk'' 
bonds that made corporate takeovers easier.
    The backlash against corporate raiders included the 
enactment of laws that made it more difficult to launch hostile 
takeovers. Bruce Bartlett, writing in the Washington Times in 
2001, commented on the effects of these laws, ``Without the 
threat of a takeover, managers have been able to go back to 
ignoring shareholders, treating them like a nuisance, and 
giving themselves bloated salaries and perks, with little 
oversight from corporate boards. Now insulated from 
shareholders once again, managers could engage in unsound 
practices with little fear of punishment for failure.'' The 
federal ``crackdown'' on corporate raiders, combined with 
provisions in Sarbanes-Oxley disqualifying the people who are 
the most capable of serving as shareholder watchdogs from 
serving on corporate boards, contributed to the disconnect 
between CEO salaries and creation of shareholder value that is 
being used to justify another expansion of the regulatory 
state.
    In addition to repealing laws that prevent shareholders 
from exercising control over corporations, Congress should also 
examine United States monetary policy's effects on income 
inequality. When the Federal Reserve Board injects credit into 
the economy, the result is at least a temporary rise in 
incomes. However, those incomes do not rise equally. People who 
first receive the new credit--who in most instances are those 
already at the top of the economic pyramid--receive the most 
benefit from the Fed's inflationist polices. By the time those 
at the lower end of the income scale experience a nominal rise 
in incomes, they must also contend with price inflation that 
has eroded their standard of living. Except for the lucky few 
who take advantage of the new credit first, the negative 
effects of inflation likely more than outweigh any temporary 
gains in nominal income from the Federal Reserve's expansionist 
polices.
    For evidence of who really benefits from a system of fiat 
money and inflation, consider that in 1971, before President 
Nixon severed the last link of the American currency to gold, 
the typical CEO's salary was 30 times higher than the average 
wage of the typical employee; today it is 500 times higher.
    Explosions in CEO salaries can be a sign of a federal 
credit bubble, which occurs when Federal Reserve Board-created 
credit flows into certain sectors such as the stock market or 
the housing market. Far from being a sign of the health of 
capitalism, excessive CEO salaries in these areas often signal 
that a bubble is about to burst. When a bubble bursts, people 
at the bottom of the economic ladder bear the brunt of the 
bust.
    Instead of imposing new laws on private companies, Congress 
should repeal the laws that have weakened the ability of 
shareholders to discipline CEOs and boards of directors that do 
not run corporations according to the shareholders' wishes. 
Congress should also examine how fiat money contributes to 
income inequality. I therefore request that my colleagues join 
me in opposing H.R. 1257 and instead embrace a pro-freedom, 
pro-shareholder, and pro-worker agenda of free markets and 
sound money.
                                                          Ron Paul.

                                  
