U.S. Representative Barney Frank has proposed legislation that would give shareholders
the opportunity to vote on compensation packages for chief executives of large public
companies, USA Today reports.
Frank, a Democrat from Massachusetts, says the legislation would keep CEO pay
packages in check by giving shareholders the power to vote on them.
The Protection Against Executive Compensation Abuse Act would require shareholder
approval of compensation contracts of CEOs at large public companies. The newspaper
notes that the legislation would also require public companies to disclose more
detailed information about CEO pay packages, including:
- The value of perks like use of corporate jets.
- Golden-parachute agreements
- Corporate policy for retrieving incentive pay awarded for financial reports
that later turn out to be faulty.
"What's sexy about this legislation is that for the first time, it gives
shareholders some veto power," says Nell Minow, editor of The Corporate
Library, a corporate governance watchdog group. "If you look at people
whose pay is in the stratosphere, they are movie stars, rock stars, athletes,
investment bankers and CEOs. One of these things is not like the other. The
first four are paid for their performance."