Shareholder Vote On Executive Compensation Act
Floor Speech
SHAREHOLDER VOTE ON EXECUTIVE COMPENSATION ACT -- (House of Representatives - April 18, 2007)
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Mr. CLEAVER. Mr. Chairman, today I rise in support of H.R. 1257, the Shareholder Vote on Executive Compensation Act. I think that it has been going on far too long where shareholders and, frankly, the American people, have had to pay for services not rendered and jobs not performed well.
The chairman of our committee, Chairman Frank, has already spoken about Mr. Nardelli. There are others, Pfizer's Henry McKinnell, and he also received a $200 million, $200 million exit package in spite of the fact that his performance was poor. KB Home, former CEO, Bruce Karatz, could collect $175 million despite his involvement in backdating stock options at the company. Some CEOs were, in fact, undeserving of compensation packages they received. This is not fair.
The one that I think troubles most Americans the most is Lee Raymond, former CEO of ExxonMobil. During our committee hearing, I raised this issue with our panel to ask if they had any problems with the compensation package for Mr. Raymond. He received a $400 million pay and retirement deal as the prices of gasoline soared and millions of hardworking Americans going to the pump every single day are paying more and more money for gas.
Twelve years ago, when Mr. Raymond became the CEO of Exxon, the average price of gasoline was $1.02 a gallon. In June, 2006, when he retired, the price, the average price of gasoline was $2.96 a gallon. Yet he received $400 million in retirement. The people who are watching this debate, the overwhelming majority, will say to themselves, that is not right.
Now, during the same period of time that the CEO of ExxonMobil was building up for this great exit package, real wages for the average American worker actually declined. While I believe deeply in, and that prosperity is as American as apple pie, I don't believe that we should reward CEOs for doing a poor job.
So I want to thank committee Chairman Frank and our ranking member, Spencer Bachus, and the members of the Financial Services Committee for bringing this bill forward to the floor today. I cosponsored this legislation, I voted for it in committee, and I will be voting for it when it comes to the floor.
Now, the sad thing about this legislation is that many hardworking Americans get up each day and go to work. If they perform poorly, they lose their job, and they certainly will not get an exit package that will take care of them and most of the people in their cities for life, $400 million.
I would ask the people watching this program, do you have a problem with that? The answer, I think, is echoing all around this country. Yes, I have a problem with that.
This bill enables shareholders to express their views on their company's executive compensation practices without setting up caps on the size and nature of executive pay. This legislation requires only, only, that public companies include on their proxy statements to shareholders, an annual nonbinding, nonbinding, nonbinding advisory shareholder vote on the company's executive compensation disclosures, which are already required by the SEC, and an additional nonbinding advisory vote if the company awards a new, not already disclosed, golden parachute while negotiating the purchase or sale of the company. The nonbinding advisory vote will give shareholders an opportunity, an opportunity to express themselves.
They can say ``yes'' or ``no'' to the proposed executive compensation without diminishing, reducing, interfering with the board's legal authority.
Ultimately, if a CEO is doing a good job, I am sure that that CEO will receive the support of that company's shareholders and the appropriate compensation package. That is the way America operates. But what is going on now is an abomination that we will allow people to run a company into the ground and then walk away set, not only for life for themselves but five or six generations to come.
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