UPDATE:US House Considers Executive Comp Bill; May Exempt Small Cos
July 28 2009 - 12:23PM
Dow Jones News
A U.S. House of Representatives panel on Tuesday began
consideration of a measure setting new executive compensation
standards for U.S. firms, one of the first substantive steps in
Democrats' broader regulatory overhaul efforts.
The House Financial Services Committee, chaired by Rep. Barney
Frank, D-Mass., started debating a measure that would give
shareholders a greater ability to weigh in on compensation packages
and would ensure that board compensation committees are made up of
independent directors.
Financial services firms are specifically singled out in the
legislation, with banks, broker-dealers and other financial firms
potentially being required to disclose any incentive-based
compensation structures. Federal regulators would also be
authorized to restrict "inappropriate or imprudently risky" pay
packages at financial firms.
The issue is a difficult one for Republicans, who oppose
government interference on compensation matters but recognize the
popular outrage over executive pay at firms such as American
International Group Inc. (AIG) and other bailed-out financial
institutions over the last year.
"It's not to our advantage being up here opposing executive
compensation. It's a very popular thing to go after," said Rep.
Spencer Bachus of Alabama, the panel's ranking Republican, during a
heated exchange with Frank.
The panel made a number of changes to the bill, exempting
financial firms with under $1 billion in assets, and adding Fannie
Mae (FNM) and Freddie Mac (FRE) to the firms that would be
covered.
GOP lawmakers raised the specter that "federal bureaucrats"
would be setting how much pay employees receive, a charge Democrats
aggressively rejected.
"There's nothing in this bill that allows the government to set
compensation," said Rep. Mel Watt, D-N.C. "Quit trying to hide
behind the government as a big, bad entity."
-By Michael R. Crittenden, Dow Jones Newswires; 202-862-9273;
michael.crittenden@dowjones.com