Shareholder bill targets executive payBut the following quote strikes me as one of the most interesting bits of the story:
WASHINGTON - The House voted Friday to give shareholders at public corporations a voice in executive pay packages that typically equal 500 times the salaries of workers at those companies.
The shareholder vote under the bill would be advisory only. But Democratic backers of this provision said that investors need a say when companies losing money or laying off workers are paying executives eight- and nine-figure salaries and retirement packages. "This is not an aberration, and there is a hue and a cry from the American people across the American landscape that is saying something must be done," said Rep. David Scott (news, bio, voting record), D-Ga.
The bill, which passed 269-134 and now goes to the Senate, was opposed by the White House and most Republicans. They argued that the
Securities and Exchange Commission has recently taken steps to make corporate pay packages more transparent and that Congress should stay out of corporate affairs.
Investor advocates, union pension funds and shareholder groups have supported the legislation, but GOP opponents expressed concerns it would give such groups an inroad to change a company's policies.Exactly what "agendas unrelated to the financial wealth of the companies" do Republicans think that the owners (i.e. shareholders) of those companies have? I'm curious to know. Do we really think many shareholders buy ownership stakes in a company for reasons other than to increase their wealth?
"It greatly worries me that this bill could set a precedent of giving activist institutional investors, who may have their own political and social agendas unrelated to the financial wealth of the companies, more influence," said Rep. Mike Castle, R-Del.
And even if they do, then I'm curious to know what's wrong with the owner of a company having his or her own preferences regarding profits compared to other goals. Who pays the price if the owner of a company makes a decision that results in lower profits, after all? Isn't it the owner? What's the problem with that?
One last bit of related trivia: it turns out that the U.K. has had a similar law on the books since 2003. I'd be curious to see any evidence that it has had any significant impact there, either positive or negative.