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# Legislative Bulletin.............................................\............April 18, 2007

**Contents:**

> **H.R. 1257**---Amendments to the Shareholder Vote on Executive
> Compensation Act

H.R. 1257, the Shareholder Vote on Executive Compensation Act (sponsored
by Rep. Barney Frank, D-MA), is scheduled to be considered on the House
floor today, April 18, 2007, subject to a modified open rule (H.Res.
301), making in order only those germane amendments pre-filed in the
*Congressional Record* by the close of business on April 17, 2007, or
those amendments that are *pro forma* (for the purpose of debate only).
The rule allows one motion to recommit with or without instructions. All
amendments are debatable under the five-minute rule.

The rule waives all points of order except those regarding PAYGO and
earmarks, deems the previous question as ordered, and allows the Chair
to postpone consideration of the legislation at any time during its
consideration.

Below are summaries of the 13 amendments pre-filed in the *Congressional
Record*, [the vast majority of which were introduced by RSC
Members]{.underline}.

[Note]{.underline}: The summaries are based on RSC staff's review of
*actual amendment text*. For a summary of the underlying bill, see a
separate RSC document released yesterday.

**RSC Contact**: Paul Teller; <paul.teller@mail.house.gov>; 202-226-9718

**1. Bachus (R-AL)**. Corrects certain technical errors citing current
law in the underlying bill.

**2. Campbell (R-CA):** Provides that the shareholder vote requirements
in the underlying bill would not apply with respect to any public
company that already requires the members of its board of directors to
be elected by a shareholder majority vote.

**3. *Frank (D-MA)****.* Corrects certain technical errors citing
current law in the underlying bill. (same as Bachus amendment above)

**4. *Frank (D-MA)****.* Strengthens the language regarding shareholder
voting to ensure that such voting is not just permitted but provided
for. Clarifies that the shareholding voting would not be binding on the
corporation as a whole. Changes the description of the proxy, consent,
or authorization in the underlying bill from that for "an annual or
other meeting of the shareholders" to that for "an annual meeting of the
shareholders (or a special meeting in lieu of the annual meeting)."
(This last provision is the same as the Roskam amendment below.)

**5. Garrett (R-NJ):** Provides that the shareholder vote requirements
in the underlying bill would only apply if a company's executive
compensation exceeds by 10% or more the average compensation for
comparable positions in companies within the company's industry
[and]{.underline} among companies with comparable total market
capitalization, as determined by the SEC.

**6. *Jackson-Lee (D-TX)*:** Requires that public companies with
websites post the results of the shareholder votes provided for in the
underlying bill in a prominent location on their respective websites
within 30 days of the votes.

**7. McHenry (R-NC):** Requires a shareholder who is casting a vote on
executive compensation on behalf of the beneficiaries of a pension fund
to disclose to such beneficiaries whether the vote was

cast to approve or disapprove the compensation.

**8. Price (R-GA):** Requires the SEC to study whether a separate
non-binding shareholder vote on executive compensation would hinder a
publicly traded company's ability to recruit and retain executives. If
the SEC finds that such voting [would]{.underline} hamper a company's
ability to compete for the best candidates, then the non-binding
shareholder vote provisions would not go in effect. If the study finds
that such voting would [not]{.underline} hinder recruitment and
retention, then the underling bill's voting provisions would go into
effect 90 days after the SEC transmits its report to Congress.

**9. Price (R-GA):** Replaces the entire underlying bill with a
congressional finding that the disclosure rules on executive
compensation adopted by the SEC in September 2006 (71 Fed. Reg. 53158)
provide an "adequate and complete" mechanism for shareholder approval of
executive compensation.

**10. Price (R-GA):** Reverses the Rep. Barney Frank (D-MA) amendment
that passed in committee, which clarified that nothing in the underlying
bill should be construed to restrict the ability of shareholders to make
proposals for inclusion in proxy materials related to executive
compensation and golden parachute compensation. This Price amendment
would strike the Frank committee-amendment language and explicitly make
shareholders who are allowed to vote under this legislation
[ineligible]{.underline} to make proposals for inclusion in any proxy
materials related to compensation.

**11. Putnam (R-FL):** Prevents the shareholder vote requirements of the
underlying bill from applying to a public company that provides the
majority of its executive compensation in the form of non-qualified
deferred compensation (as disclosed pursuant to the SEC's compensation
disclosure rules).

**12. Roskam (R-IL):** Changes the description of the proxy, consent, or
authorization in the underlying bill from that for "an annual or other
meeting of the shareholders" to that for "an annual meeting of the
shareholders (or a special meeting in lieu of the annual meeting)."

**13. Sessions (R-TX):** Prohibits a shareholder's vote from counting if
the shareholder has spent,

directly or indirectly, more than a *de minimis* amount of money (as
determined by the SEC) on activities to influence a vote of other
shareholders, unless such shareholder discloses to the

SEC:

-   the identity of all persons or entities engaged in such a campaign;

-   the activities engaged in to influence the vote; and

-   the amount of money expended on such a campaign.

The amendment sponsor's office writes, "The Democrat Executive
Compensation legislation would allow outside organizations to spend
money to influence the outcome of this new mandatory shareholder vote,
without disclosing their identities to shareholders. This opens the door
for activist organizations -- such as labor unions, environmental groups
or 'consumer advocates' -- to spend as much money as they want
influencing shareholders to reach their preferred outcome, but never
have to disclose their identity or practices to anyone."

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