Rep. Peters' Bill To Curb Reckless Wall Street Risk, Executive Pay Discussed In Hearing Today

Press Release

The House Financial Services Committee's Subcommittee on Capital Markets today heard testimony relating to legislation authored by U.S. Representative Gary Peters to curb excessive Wall Street risk and executive pay schemes that encourage such risk. Rep. Peters' Shareholder Empowerment Act (H.R. 2861) would give investors--a company's true owners--greater ability to ensure that executives act in investors' long-term interest rather than making irresponsible bets for their own short-term gain, the sort of reckless investing that led to the recent financial crisis.

"Action must be taken now to curb the type of excessive risk taking and greed on Wall Street that caused our economy to crumble," said Rep. Peters. "Wall Street executives who pursued reckless investment strategies were a major factor to the recent financial meltdown. This bill will help prevent irresponsible behavior on Wall Street from causing future economic crises."

Peters' legislation gives shareholders a stronger voice in overseeing the companies they own by making common sense changes to corporate election rules, executive compensation approval processes and other areas to prevent the reckless risk taking that helped push the financial sector to the brink of collapse. As an investment advisor for over 20 years, taking action to help families protect their retirement and savings investments has been something Representative Peters has cared about deeply since coming to Congress last year.

The Shareholder Empowerment Act would:

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Curb excessive risk-taking of the sort that led to the current financial meltdown by requiring shareholders to be informed of the performance targets being used to determine bonuses and other incentives;
* Provide for an annual advisory shareowner vote on the compensation of senior executives;
* Strengthen clawback provisions to recover executive bonuses or other payments awarded on the basis of fraudulent or faulty earning statements;
* Stop golden parachute payments to executives who are terminated for poor performance;
* Prohibit the same person from serving as CEO and board director;
* Keep compensation advisors independent by prohibiting them from performing other consulting in which it reports to company management;
* Make corporate elections fairer by allowing investors more of a voice in company elections by requiring directors to receive a majority vote in uncontested elections, allowing investors to nominate a candidate for director on management's proxy card and eliminating uninstructed broker votes that allow fund managers to vote on investors' behalf.

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