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Friday, April 20, 2007
Keeping Government out of the Boardroom
This week, the White House issued a statement asserting its opposition to the right of shareholders to voice an opinion about the way the companies they own should be run. The president takes issue with Rep. Barney Frank's (D-MA) Shareholder Vote on Executive Compensation Act (H.R. 1257), which "would require that public companies ensure that shareholders have an annual nonbinding advisory vote on their company's executive compensation plans." |
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Debate on the bill, which the House passed (269-134) this afternoon, began Wednesday. Republicans quickly lined up to declare their objections to allowing Congress to regulate how corporations do business, and their fear of sliding down a slippery slope.
This is, of course, completely absurd (SEC, anyone?). That an entity known as a "corporation" exists and has legal rights and responsibilities is absolutely fundamental to a functioning economy. And it is only the government that can grant and guarantee such rights.
What this legislation will do is allow shareholders to express displeasure (or approval) that their company pays its CEO some 400 times that of its average worker. By passing the "say on pay" bill, Congress is giving owners of corporations a right to simply express their opinion on executive compensation. Period. Boards of directors can ignore this nonbinding expression of opinion if they chooses to do so.
Why oh why, I wonder, is the president and Republican members of Congress so afraid to let the people be heard?
Posted by Craig Jennings
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