Providing for Consideration of HR 1257, Shareholder Vote on Executive Compensation Act
Floor Speech
PROVIDING FOR CONSIDERATION OF H.R. 1257, SHAREHOLDER VOTE ON EXECUTIVE COMPENSATION ACT
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Mr. McGOVERN. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, for the purpose of debate only, I yield the customary 30 minutes to the gentleman from Texas (Mr. Sessions). All time yielded during consideration of the rule is for debate only.
Mr. Speaker, H. Res. 301 is an open rule with a preprinting requirement providing for the consideration of H.R. 1257, the Shareholder Vote on Executive Compensation Act. The rule provides 1 hour of general debate, controlled by the Committee on Financial Services. The rule waives all points of order against consideration of the bill except clauses 9 and 10 of rule XXI. The rule makes in order the Committee on Financial Services amendment in the nature of a substitute as an original bill for the purpose of amendment, which shall be considered as read. The rule requires that any amendments to the bill must be preprinted in the Congressional Record on or before Tuesday, April 17, 2007. Finally, the rule provides one motion to recommit, with or without instructions.
Mr. Speaker, I rise today in support of this open rule. This is a good, appropriate rule that allows any germane amendment to be debated and voted on by this body, as long as that amendment was preprinted in the Congressional Record. This rule is appropriate because it allows for real debate and for up or down votes on matters related to this bill. I believe this is a good process, and I want to commend both Chairman Frank and Ranking Member Bachus for requesting this rule and for testifying in support of this rule in the Rules Committee yesterday.
I also rise in support of the underlying legislation. The purpose of this bill is straightforward. H.R. 1257, the Shareholder Vote on Executive Compensation Act, allows for shareholders of a publicly traded corporation to conduct annual nonbinding advisory votes on the compensation of the corporation's executives. Basically, this bill would allow the shareholders, those with the most vested interests, to express their approval or disapproval of a company's compensation practices.
Let me be clear. This bill does not force a company to accede to the vote, nor does it overrule a decision by the board of directors of a corporation. Instead, it allows the shareholders to demonstrate their public approval or disapproval of a corporation's compensation practices. The bill does not allow shareholders to set caps on the size or nature of executive compensation.
By allowing for an annual vote by shareholders, H.R. 1257 goes one step beyond the recently enacted regulation by the Securities and Exchange Commission, which only requires that the amount in executive compensation be disclosed.
Mr. Speaker, this legislation would require public companies to include this nonbinding shareholder vote in their annual proxy statement to shareholders. An additional nonbinding advisory would also be provided to shareholders if the company awards a new compensation package while simultaneously negotiating the purchase or sale of the company.
By taking this step, H.R. 1257 increases accountability, and also enables the SEC to better monitor the executive compensation practices of corporations. I hope that my former colleague from California, Chris Cox, now the Commissioner of the SEC, feels encouraged by this legislation and works toward further protecting shareholder rights.
Over the past year, CEOs of major corporations have received multimillion-dollar severance packages, despite falling stocks and market share drops during their tenures. These so-called ``golden parachutes'' highlight the disparity between shareholders' rights and executive compensation oversight.
In addition to neglecting shareholders' interests, current executive compensation practices actually hurt the long-term corporate value of a company. Unprecedented growth in executive compensation over the past two decades has taken money out of the pockets of shareholders and compromised the long-term interests of too many companies.
According to the Corporate Library, in 2006, the average CEO of a Standard and Poor's 500 company received $14.78 million in compensation. It is only fair that the shareholders, the people who actually foot the bill for severance packages, have the opportunity to express their support or disapproval of their company's executive compensation.
H.R. 1257 empowers shareholders and complements the SEC's current regulations regarding executive compensation.
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Mr. McGOVERN. Mr. Speaker, again I would remind my colleagues that this is an open rule that allowed every Member of this House to be able to offer an amendment if that Member so desired. In fact, as the gentleman from Texas pointed out, he himself will be offering an amendment. And so I think this rule deserves support.
I should point out for the record that when the gentleman's party, the Republic Party, was in the majority here, that even though I was on the Rules Committee, routinely Members were denied the right to even offer their amendments. There were 13 Members who have decided to offer amendments. Ten of them are Republican. I think this is a fair process and this rule deserves support.
Having said that, I would like to yield 4 minutes to the distinguished gentlewoman from Florida (Ms. Castor), a member of the Rules Committee.
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Mr. McGOVERN. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, let me first of all say that I apologize to the gentleman from California, the former distinguished chairman of the Rules Committee, for this open rule. I guess he is upset that 13 Members have decided to offer amendments. They have known about this bill, by the way, for close to 3 weeks. So 13 Members, 10 of them Republican, have decided to put forward amendments that will be debated and considered on this floor, including the distinguished gentleman from Texas (Mr. Sessions).
I do not know whether the gentleman from California wants me to apologize to Mr. Sessions and the other Republicans for allowing their amendments to be made in order, but the bottom line is, what we are trying to do is break the trend that existed in the Rules Committee when they were in charge, which is that nobody would be allowed to offer amendments on the floor.
One of the things that this leadership has promised is a more open process, a process that is more fair, and that is what we are trying to do today. There are 13 amendments that have been pre-filed. They will all be considered on the floor unless the people who printed those amendments do not want to offer them. That is a fair process.
As somebody who sat on the Rules Committee for many years and who routinely saw closed rules reported under that committee with not a peep from anybody on that side, it is a little bit hard to digest this whining over an open process. I guess my colleagues on the other side of the aisle object to the fact that Members should have a right to read an amendment that they are going to vote on. I can understand that because they would routinely bring huge bills, hundreds of pages in length, to the floor without giving anybody in this Chamber the opportunity to read them. Those practices hopefully are over for good.
This is a fair rule. This is an open rule, and I urge my colleagues to support it.
At this point, let me inquire from the gentleman from Texas whether or not he has any additional speakers, because at this point, I am the last one on this side.
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Mr. McGOVERN. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, if the gentleman from Georgia thinks this rule is such a bad idea, I hope that maybe he might reconsider offering the three amendments that he has pre-filed.
Let me just say for the record, because I think it is important to state this, the gentleman from Georgia just went on a rant, and in the previous Congress when his party was in control, in the entire Congress there was one open rule that was not an appropriation bill, one, and I do not recall a single instance when the gentleman from Georgia ever came to the floor and complained about that. I do not recall a single instance when the gentleman from Georgia or, quite frankly, anybody on the other side came to the floor and objected when the Republican-controlled Rules Committee waived the requirement that Members have 3 days to be able to read a report before a bill was considered.
I don't remember a single instance when the gentleman from Georgia, or, quite frankly, anybody who we have heard complain today, ever came on the House floor and voted against a closed rule. They ran this place under the most restrictive closed process in the history of this Congress.
I think that needs to be said for the record because it goes to the point that I was making earlier that I don't understand what all the complaints are about. You have every Member who wanted to offer an amendment to this bill given the opportunity to do so.
They knew that this bill was coming 3 weeks in advance. They could have thought about it for 3 weeks, they could have instructed their staff during that period of 3 weeks to come up with something. Obviously, a number of people did, including the gentleman from Georgia, who has three amendments we are going to have to listen to.
Let me again urge my colleagues to support this rule. It is a fair rule. It is an open rule.
I am sorry if they don't like the fact that Members ought to have an opportunity to read amendments and read bills before they are voted on, but I think that is a fair thing to do. Of course, when they were in charge, they would routinely waive that right. But, you know, we will respect that.
Mr. Speaker, I reserve the balance of my time and would ask the gentleman from Texas if he has any additional speakers.
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Mr. McGOVERN. Mr. Speaker, let me urge all my colleagues to support the rule and to also support the underlying bill. H.R. 1257 is a good bill. If you want to defend the status quo, then vote against it. But if you want more accountability, more transparency, then vote for it. This should not be a partisan issue, and I hope that it would get a strong bipartisan vote on passage.
Let me again urge my colleagues to support the rule, and this is a rule that allows the gentleman from Texas to be able to offer an amendment. It allows the gentleman from Georgia, whom we heard earlier, to offer three amendments. It allows for every single Member of this House, Democrat or Republican, to be able to offer an amendment to this bill.
This is something new compared to the way the Rules Committee was run under the previous leadership. This is a rule that allows people to be able to heard, to be able to bring their views to the floor, and to be able to debate them. For the gentleman from Texas or the gentleman from Georgia or anybody else to complain that somehow this is a restrictive rule just defies the facts.
The fact of the matter is that under their leadership, restrictive rules were the norm. Closed rules were the norm. Not once, not once did I hear anybody on the other side complain about the restrictive rule or closed rule or even vote against the closed rule. This allows every single Member who wanted to offer an amendment to offer an amendment.
This is an open rule with a preprinted requirement. This is a good rule. I would urge all my colleagues to support the rule.
The material previously referred to by Mr. Sessions is as follows:
(The information contained herein was provided by Democratic Minority on multiple occasions throughout the 109th Congress.)
The Vote on the Previous Question: What It Really Means
This vote, the vote on whether to order the previous question on a special rule, is not merely a procedural vote. A vote against ordering the previous question is a vote against the Democratic majority agenda and a vote to allow the opposition, at least for the moment, to offer an alternative plan. It is a vote about what the House should be debating.
Mr. Clarence Cannon's Precedents of the House of Representatives, (VI, 308-311) describes the vote on the previous question on the rule as ``motion to direct or control the consideration of the subject before the House being made by the Member in charge.'' To defeat the previous question is to give the opposition a chance to decide the subject before the House. Cannon cites the Speaker's ruling of January 13, 1920, to the effect that ``the refusal of the House to sustain the demand for the previous question passes the control of the resolution to the opposition'' in order to offer an amendment. On March 15, 1909, a member of the majority party offered a rule resolution. The House defeated the previous question and a member of the opposition rose to a parliamentary inquiry, asking who was entitled to recognition. Speaker Joseph G. Cannon (R-Illinois) said: ``The previous question having been refused, the gentleman from New York, Mr. Fitzgerald, who had asked the gentleman to yield to him for an amendment, is entitled to the first recognition.''
Because the vote today may look bad for the Democratic majority they will say ``the vote on the previous question is simply a vote on whether to proceed to an immediate vote on adopting the resolution ..... [and] has no substantive legislative or policy implications whatsoever.'' But that is not what they have always said. Listen to the definition of the previous question used in the Floor Procedures Manual published by the Rules Committee in the 109th Congress, (page 56). Here's how the Rules Committee described the rule using information form Congressional Quarterly's ``American Congressional Dictionary'': ``If the previous question is defeated, control of debate shifts to the leading opposition member (usually the minority Floor Manager) who then manages an hour of debate and may offer a germane amendment to the pending business.''
Deschler's Procedure in the U.S. House of Representatives, the subchapter titled ``Amending Special Rules'' states: ``a refusal to order the previous question on such a rule [a special rule reported from the Committee on Rules] opens the resolution to amendment and further debate.'' (Chapter 21, section 21.2) Section 21.3 continues: Upon rejection of the motion for the previous question on a resolution reported from the Committee on Rules, control shifts to the Member leading the opposition to the previous question, who may offer a proper amendment or motion and who controls the time for debate thereon.''
Clearly, the vote on the previous question on a rule does have substantive policy implications. It is one of the only available tools for those who oppose the Democratic majority's agenda and allows those with alternative views the opportunity to offer an alternative plan.
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