Conspicuous compensation

8 March 2007 By David Vise

By opposing nonbinding ballots on executive compensation, companies leave themselves subject to lawmakers whims. Being proactive would stem support for Barney Frank’s "say on pay" legislation. Such bills often have costly, unintended consequences.

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Rep. Barney Frank has introduced legislation that would mandate nonbinding shareholder votes on executive compensation, including pay, retirement and severance. On March 8, he presided over a House hearing on the matter.

Meanwhile, SEC Chairman Cox said the agency will employ datatagging technology to highlight pay practices at hundreds of major U.S. public corporations by June. After tagging executivecompensation data, the information will be posted on the SEC web site. Tagging will facilitate both comparison and analysis of pay packages.

A referendum giving shareholders the right to cast nonbinding, advisory votes on pay will is slated to be voted on at the annual meetings of more than 50 major companies, according to Institutional Shareholder Services.

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