59–006 

110TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 110–88 

SHAREHOLDER VOTE ON EXECUTIVE COMPENSATION 

ACT 

APRIL 16, 2007.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. FRANK of Massachusetts, from the Committee on Financial 

Services, submitted the following 

R E P O R T 

together with 

DISSENTING VIEWS 

[To accompany H.R. 1257] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 1257) to amend the Securities Exchange Act of 1934 to 

provide shareholders with an advisory vote on executive compensation, having considered the same, report favorably thereon with an 

amendment and recommend that the bill as amended do pass. 

CONTENTS 

Page 

Amendment .............................................................................................................. 2 

Purpose and Summary ............................................................................................ 2 

Background and Need for Legislation .................................................................... 3 

Hearings ................................................................................................................... 5 

Committee Consideration ........................................................................................ 5 

Committee Votes ...................................................................................................... 6 

Committee Oversight Findings ............................................................................... 15 

Performance Goals and Objectives ......................................................................... 15 

New Budget Authority, Entitlement Authority, and Tax Expenditures ............. 16 

Committee Cost Estimate ....................................................................................... 16 

Congressional Budget Office Estimate ................................................................... 16 

Federal Mandates Statement ................................................................................. 17 

Advisory Committee Statement .............................................................................. 17 

Constitutional Authority Statement ...................................................................... 18 

Applicability to Legislative Branch ........................................................................ 18 

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Earmark Identification ............................................................................................ 18 

Section-by-Section Analysis of the Legislation ...................................................... 18 

Changes in Existing Law Made by the Bill, as Reported ..................................... 19 

Minority, Dissenting, or Additional Views ............................................................ 21 

AMENDMENT

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Shareholder Vote on Executive Compensation Act’’. 

SEC. 2. SHAREHOLDER VOTE ON EXECUTIVE COMPENSATION DISCLOSURES. 

(a) AMENDMENT.—Section 16 of the Securities Exchange Act of 1934 (15 U.S.C. 

78n) is amended by adding at the end the following new subsection: 

‘‘(h) ANNUAL SHAREHOLDER APPROVAL OF EXECUTIVE COMPENSATION.—

‘‘(1) IN GENERAL.—Any proxy or consent or authorization for an annual or 

other meeting of the shareholders occurring on or after January 1, 2009, shall 

permit a separate shareholder vote to approve the compensation of executives 

as disclosed pursuant to the Commission’s compensation disclosure rules (which 

disclosure shall include the compensation discussion and analysis, the compensation tables, and any related material). The shareholder vote shall not be 

binding on the board of directors and shall not be construed as overruling a decision by such board, nor to create or imply any additional fiduciary duty by 

such board, nor shall such vote be construed to restrict or limit the ability of 

shareholders to make proposals for inclusion in such proxy materials related to 

executive compensation. 

‘‘(2) SHAREHOLDER APPROVAL OF GOLDEN PARACHUTE COMPENSATION.—

‘‘(A) DISCLOSURE.—In any proxy solicitation material for an annual or 

other meeting of the shareholders occurring on or after January 1, 2009, 

that concerns an acquisition, merger, consolidation, or proposed sale or 

other disposition of substantially all the assets of an issuer, the person 

making such solicitation shall disclose in the proxy solicitation material, in 

a clear and simple form in accordance with regulations of the Commission, 

any agreements or understandings that such person has with any principal 

executive officers of such issuer (or of the acquiring issuer, if such issuer 

is not the acquiring issuer) concerning any type of compensation (whether 

present, deferred, or contingent) that are based on or otherwise relate to 

the acquisition, merger, consolidation, sale, or other disposition, and that 

have not been subject to a shareholder vote under paragraph (1). 

‘‘(B) SHAREHOLDER APPROVAL.—The proxy solicitation material containing 

the disclosure required by subparagraph (A) shall require a separate shareholder vote to approve such agreements or understandings. A vote by the 

shareholders shall not be binding on the board of directors and shall not 

be construed as overruling a decision by such board, nor to create or imply 

any additional fiduciary duty by such board, nor shall such vote be construed to restrict or limit the ability of shareholders to make proposals for 

inclusion in such proxy materials related to executive compensation.’’. 

(b) DEADLINE FOR RULEMAKING.—Not later than 1 year after the date of the enactment of this Act, the Securities and Exchange Commission shall issue any final 

rules and regulations required by the amendments made by subsection (a). 

PURPOSE AND SUMMARY

H.R. 1257, the Shareholder Vote on Executive Compensation Act, 

amends the Securities and Exchange Act of 1934 to provide shareholders with a meaningful say on their company’s executive compensation practices without setting any caps on executive pay or 

micromanaging the company. It will do this by (1) requiring that 

public companies include in their annual proxy a nonbinding shareholder vote on the executive compensation disclosures already required by the Securities and Exchange Commission; and (2) requiring a separate shareholder vote for additional compensation that is 

tied to the sale or purchase of a company. 

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1Lucian Bebchuk and Yaniv Grinstein, ‘‘The Growth in Executive Pay,’’ 2005. 

BACKGROUND AND NEED FOR LEGISLATION

According to the Corporate Library’s 2006 Chief Executive Officer (CEO) Pay Survey of roughly 1400 CEOs (covering pay in FY 

2005), the median CEO received $13.51 million in total compensation, up 16 percent over FY 2004. This came on the heels of a 30 

percent increase over FY 2003, 15 percent over FY 2002 and 9.5 

percent over FY 2001. In addition to the compounding effect of this 

year-over-year growth, some note that looking at median pay alone 

artificially reduces the problem because medians do not account for 

the large pay increases at the upper extreme. (For example, the 

2005 Pay Survey found that the average CEO pay was up 91 percent, after 27 CEOs received over 1,000 percent more than their 

previous year’s pay). 

Another report, done by USA Today in March 2005, found that median CEO compensation in 2004 was $14 million (with one CEO 

receiving $84 million exercising options, and new options grants 

worth more than $130 million). In comparison, the same study 

found that the average rank-and-file worker’s pay increased 2.5 

percent. 

The disparity between workers and executives has grown significantly in recent years. In their book Pay Without Performance, Lucian Bebchuk and Jesse Fried found that in 1991, the average 

large-company CEO received approximately 140 times the pay of 

an average worker; in 2003, the ratio was about 500 to 1. Researchers argue that the amounts have risen so far so fast that they can 

no longer be explained by traditional valuation models. Even when 

adjusting for other variables, researchers found that executive compensation is significantly higher today than in the early 1990s. For 

example, Lucian Bebchuk and Yaniv Grinstein found ‘‘[d]uring this 

period [1993–2003], pay has grown much beyond the increase that 

could be explained by changes in firm size, performance and industry classification. Had the relationship of compensation to size, performance and industry classification remained the same in 2003 as 

it was in 1993, mean compensation in 2003 would have been only 

about half of its actual size.’’).1

The Cost of Executive Compensation. The amount of money paid 

to executives of public companies reflects real costs to shareholders 

and the economy. According to Bebchuk and Grinstein’s research, 

in 1993, the aggregate compensation paid to the top five executives 

of U.S. public companies represented 5 percent of company profits; 

by 2003 the ratio had more than doubled to 10 percent and the 

total amount paid to these executives during this period was roughly $350 billion. 

Concerns Over Incentives for Executives. In addition to concerns 

about the sheer size, some have noted that these packages may be 

giving executives incentives that undermine shareholder value and 

market confidence: • Earnings Manipulation. Putting aside outright earnings 

fraud, because accounting standards are not always clear, excessive compensation (particularly very large bonuses based on 

meeting ‘‘Wall Street expectations’’) may be giving executives 

an incentive to use ‘‘aggressive’’ accounting methods that maximize their compensation. By meeting certain triggers (even by 

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2See, e.g., ‘‘Sorry, I’m Keeping the Bonus Anyway’’ New York Times, Mar. 13, 2005. 3See Hartzell, Ofek and Yermack, ‘‘What’s In It For Me? CEOs Whose Firms Are Acquired.’’ Review of Financial Studies 17:37–61 (2004); and Julie Wulf ‘‘Do CEOs in Mergers Trade Power 

for Premium? Evidence from ‘Mergers of Equals,’ ’’ Journal of Law, Economics & Organization 

20 (2004): 60–101. 4See, ‘‘Fannie Mae Exit Packages Face Review,’’ Washington Post, Dec. 23, 2004. 5 ‘‘Home Depot Chief’s Pay in 2007 Could Reach $8.9 Million,’’ New York Times, Jan. 25, 2007. 

hundredths of a percentage point), executives can reap enormous sums of money. Years (or months) later, if a company is 

forced to restate its earnings—and shareholder value plummets—executives may retain their bonuses.2

• Unprofitable Mergers/Acquisitions. Because senior executives may receive additional compensation when they buy a 

new company or sell their current one (and are responsible for 

negotiating or agreeing to the overall deal), there can be a conflict of interest between the executives’ interest (i.e. closing the 

deal and obtaining a ‘‘golden parachute’’) and the company’s interest (i.e. maximizing shareholder value). Studies of mergers 

have found that target CEOs were willing to accept lower acquisition premiums when the acquirer promised them highranking managerial post after the acquisition.3 There are concerns that similar results might follow from direct monetary 

compensation. 

Growth in Compensation Does Not Appear Tied to Performance. 

Several observers have argued that executive compensation is not 

tied to company performance. Others have noted that in many instances senior executives appear to be being ‘‘paid for failure.’’ As 

the Financial Services Committee has seen first hand, even executives of institutions that lose money, restate earnings, and face extensive regulatory scrutiny have received (and retained) substantial compensation packages. After being forced out of Fannie Mae 

because the company used faulty accounting—resulting in a multibillion dollar restatement—former Fannie Mae CEO Franklin 

Raines may receive a pension worth roughly $1.4 million per year 

for life and prorated portions of incentive stock awards that could 

be worth millions of dollars.4 Most recently, Home Depot CEO Robert Nardelli, who was paid millions over the course of a six-year 

tenure when the company’s stock price fell 7.9 percent, left with a 

$210 million separation package.5

Securities and Exchange Commission Compensation Disclosures. 

Last year, the Securities and Exchange Commission revised its disclosure rules to require that public companies provide more disclosure of executive compensation than had previously been the case. 

After overwhelming response (over 20,000 comments), the SEC’s 

final rules require that companies disclose to shareholders, in plain 

English and significantly greater detail, their executive compensation practices. In particular, it requires greater disclosure of the 

company’s compensation plans for the CEO, CFO and highest paid 

executive officers and board members. 

Although the SEC’s executive compensation rules were considered by many to have made substantial progress on disclosure, 

some have noted that it did not (1) provide any new tools for owners to tailor/improve their company’s compensation approach; nor 

(2) change the fundamental relationship between CEOs and Boards 

that gives rise to high CEO pay: in general, management (CEOs) 

select the Boards that set CEO pay. 

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6See, e.g., ‘‘Global Investor Support for Advisory Shareholder Votes on Executive Compensation,’’ Letter to SEC Chairman Chris Cox, Jan. 25, 2007. 

Shareholder Vote on Executive Compensation Act. Building off the 

new SEC disclosures, H.R. 1257, ‘‘The Shareholder Vote on Executive Compensation Act’’ would require that public companies ensure that shareholders have: 

1. an annual nonbinding advisory vote on their company’s executive compensation disclosures; and 

2. an additional nonbinding advisory vote if the company awards 

a new golden parachute package while simultaneously negotiating 

the purchase or sale of the company. 

This second vote is designed to help address a CEO’s natural 

conflict of interest when negotiating the selling price of a company 

while simultaneously negotiating an additional personal exit package (e.g., as noted above, a CEO may be willing to sell the company 

for less if he/she personally receives more—thereby reducing shareholder value). This provision would not apply to long disclosed 

‘‘change in ownership’’ agreements—and would only apply to new 

provisions added while negotiating the sale/purchase. 

The nonbinding advisory vote will give shareholders a mechanism for supporting or opposing a company’s executive compensation plan without micromanaging the company. Knowing that they 

will be subject to some collective shareholder action will help give 

boards pause before approving questionable compensation plans. 

The nonbinding advisory vote approach has been used in the 

United Kingdom since 2003 and is now used in Australia as well. 

The policy change is credited with improving management/shareholder dialogue on executive compensation matters and increasing 

the use of long-term performance targets in incentive compensation.6 It was recently adopted voluntarily by Aflac, and is currently 

pending before numerous U.S. public companies. 

HEARINGS

The Committee on Financial Services held a hearing on March 

8, 2007, titled ‘‘Empowering Shareholders on Executive Compensation: H.R. 1257, The Shareholder Vote on Executive Compensation 

Act.’’ The following witnesses testified: 

• Lucian Bebchuk, Professor, Harvard Law School; • John J. Castellani, President, Business Roundtable; • Stephen M. Davis, Fellow, Millstein Center for Governance 

and Performance; • Richard Ferlauto, Director of Pension and Benefit Policy, 

American Federation of State, County, and Municipal Employees (AFSCME); • Steven N. Kaplan, Neubauer Family Professor of Entrepreneurship and Finance, University of Chicago Graduate School 

of Business; and • Nell Minow, Editor, the Corporate Library. 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on 

March 21 and 22, 2007, and on March 28, 2007, ordered H.R. 1257 

reported, as amended, with a favorable recommendation by a 

record vote of 37 yeas and 29 nays. 

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COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. A motion by Mr. 

Frank to report the bill, as amended, to the House with a favorable 

recommendation was agreed to by a record vote of 37 yeas and 29 

nays (Record vote FC–26). The names of Members voting for and 

against follow: 

RECORD VOTE NO. FC–26 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. X ........... ............. Mr. Bachus ........................... ........... X .............

Mr. Kanjorski ......................... ........... ........... ............. Mr. Baker ............................. ........... ........... .............

Ms. Waters ............................ X ........... ............. Ms. Pryce (OH) ..................... ........... X .............

Mrs. Maloney ......................... X ........... ............. Mr. Castle ............................ ........... X .............

Mr. Gutierrez ......................... X ........... ............. Mr. King (NY) ....................... ........... X .............

Ms. Vela ́zquez ....................... X ........... ............. Mr. Royce ............................. ........... X .............

Mr. Watt ................................ X ........... ............. Mr. Lucas ............................. ........... X .............

Mr. Ackerman ........................ X ........... ............. Mr. Paul ............................... ........... X .............

Ms. Carson ............................ X ........... ............. Mr. Gillmor ........................... X ........... .............

Mr. Sherman ......................... X ........... ............. Mr. LaTourette ...................... ........... X .............

Mr. Meeks ............................. X ........... ............. Mr. Manzullo ........................ ........... X .............

Mr. Moore (KS) ...................... X ........... ............. Mr. Jones .............................. X ........... .............

Mr. Capuano ......................... X ........... ............. Mrs. Biggert ......................... ........... X .............

Mr. Hinojosa .......................... X ........... ............. Mr. Shays ............................. ........... X .............

Mr. Clay ................................ X ........... ............. Mr. Miller (CA) ..................... ........... X .............

Mrs. McCarthy ....................... X ........... ............. Mrs. Capito .......................... ........... X .............

Mr. Baca ............................... X ........... ............. Mr. Feeney ............................ ........... X .............

Mr. Lynch .............................. X ........... ............. Mr. Hensarling ..................... ........... X .............

Mr. Miller (NC) ...................... X ........... ............. Mr. Garrett (NJ) .................... ........... X .............

Mr. Scott ............................... X ........... ............. Ms. Brown-Waite .................. ........... X .............

Mr. Green .............................. X ........... ............. Mr. Barrett (SC) ................... ........... X .............

Mr. Cleaver ........................... X ........... ............. Mr. Renzi .............................. ........... X .............

Ms. Bean ............................... X ........... ............. Mr. Gerlach .......................... ........... X .............

Ms. Moore (WI) ...................... X ........... ............. Mr. Pearce ............................ ........... X .............

Mr. Davis (TN) ...................... X ........... ............. Mr. Neugebauer .................... ........... X .............

Mr. Sires ............................... X ........... ............. Mr. Price (GA) ...................... ........... X .............

Mr. Hodes .............................. X ........... ............. Mr. Davis (KY) ...................... ........... X .............

Mr. Ellison ............................. X ........... ............. Mr. McHenry ......................... ........... X .............

Mr. Klein ............................... X ........... ............. Mr. Campbell ....................... ........... X .............

Mr. Mahoney (FL) .................. X ........... ............. Mr. Putnam .......................... ........... X .............

Mr. Wilson ............................. X ........... ............. Mrs. Bachmann .................... ........... X .............

Mr. Perlmutter ....................... X ........... ............. Mr. Roskam .......................... ........... X .............

Mr. Murphy ............................ X ........... ............. Mr. Marchant ....................... ........... ........... .............

Mr. Donnelly .......................... X ........... .............

Mr. Wexler ............................. X ........... .............

Mr. Marshall ......................... X ........... .............

Mr. Boren .............................. ........... ........... .............

The following amendments were disposed of by record votes. The 

names of Members voting for and against follow: 

An amendment in the nature of a substitute, by Mr. Price (GA), 

No. 4, was not agreed to by a record vote of 26 yeas and 35 nays 

(Record vote FC–14): 

RECORD VOTE NO. FC–14 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. ........... X ............. Mr. Bachus ........................... X ........... .............

Mr. Kanjorski ......................... ........... ........... ............. Mr. Baker ............................. ........... ........... .............

Ms. Waters ............................ ........... X ............. Ms. Pryce (OH) ..................... X ........... .............

Mrs. Maloney ......................... ........... X ............. Mr. Castle ............................ X ........... .............

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RECORD VOTE NO. FC–14—Continued 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Gutierrez ......................... ........... X ............. Mr. King (NY) ....................... X ........... .............

Ms. Vela ́zquez ....................... ........... X ............. Mr. Royce ............................. X ........... .............

Mr. Watt ................................ ........... X ............. Mr. Lucas ............................. X ........... .............

Mr. Ackerman ........................ ........... X ............. Mr. Paul ............................... X ........... .............

Ms. Carson ............................ ........... X ............. Mr. Gillmor ........................... ........... ........... .............

Mr. Sherman ......................... ........... X ............. Mr. LaTourette ...................... X ........... .............

Mr. Meeks ............................. ........... X ............. Mr. Manzullo ........................ X ........... .............

Mr. Moore (KS) ...................... ........... X ............. Mr. Jones .............................. ........... X .............

Mr. Capuano ......................... ........... X ............. Mrs. Biggert ......................... X ........... .............

Mr. Hinojosa .......................... ........... X ............. Mr. Shays ............................. X ........... .............

Mr. Clay ................................ ........... X ............. Mr. Miller (CA) ..................... X ........... .............

Mrs. McCarthy ....................... ........... X ............. Mrs. Capito .......................... X ........... .............

Mr. Baca ............................... ........... ........... ............. Mr. Feeney ............................ X ........... .............

Mr. Lynch .............................. ........... X ............. Mr. Hensarling ..................... ........... ........... .............

Mr. Miller (NC) ...................... ........... X ............. Mr. Garrett (NJ) .................... X ........... .............

Mr. Scott ............................... ........... X ............. Ms. Brown-Waite .................. X ........... .............

Mr. Green .............................. ........... X ............. Mr. Barrett (SC) ................... X ........... .............

Mr. Cleaver ........................... ........... X ............. Mr. Renzi .............................. ........... ........... .............

Ms. Bean ............................... ........... X ............. Mr. Gerlach .......................... X ........... .............

Ms. Moore (WI) ...................... ........... X ............. Mr. Pearce ............................ X ........... .............

Mr. Davis (TN) ...................... ........... ........... ............. Mr. Neugebauer .................... X ........... .............

Mr. Sires ............................... ........... X ............. Mr. Price (GA) ...................... X ........... .............

Mr. Hodes .............................. ........... X ............. Mr. Davis (KY) ...................... X ........... .............

Mr. Ellison ............................. ........... X ............. Mr. McHenry ......................... X ........... .............

Mr. Klein ............................... ........... X ............. Mr. Campbell ....................... X ........... .............

Mr. Mahoney (FL) .................. ........... X ............. Mr. Putnam .......................... ........... ........... .............

Mr. Wilson ............................. ........... X ............. Mrs.Bachmann ..................... X ........... .............

Mr. Perlmutter ....................... ........... X ............. Mr. Roskam .......................... ........... ........... .............

Mr. Murphy ............................ ........... X ............. Mr. Marchant ....................... X ........... .............

Mr. Donnelly .......................... ........... X .............

Mr. Wexler ............................. ........... X .............

Mr. Marshall ......................... ........... X .............

Mr. Boren .............................. ........... X .............

An amendment by Mr. Feeney, No. 5, providing that the cost of 

a shareholder vote be borne by requesting shareholder in certain 

circumstances, was not agreed to by a record vote of 28 yeas, 36 

nays, and 1 present (Record vote FC–15): 

RECORD VOTE NO. FC–15 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank ............................... ........... X ............. Mr. Bachus ............................ X ........... ...........

Mr. Kanjorski .......................... ........... ........... ............. Mr. Baker .............................. X ........... ...........

Ms. Waters ............................. ........... X ............. Ms. Pryce (OH) ...................... X ........... ...........

Mrs. Maloney .......................... ........... X ............. Mr. Castle ............................. X ........... ...........

Mr. Gutierrez .......................... ........... X ............. Mr. King (NY) ........................ X ........... ...........

Ms. Vela ́zquez ........................ ........... X ............. Mr. Royce .............................. X ........... ...........

Mr. Watt ................................. ........... X ............. Mr. Lucas .............................. X ........... ...........

Mr. Ackerman ......................... ........... X ............. Mr. Paul ................................ X ........... ...........

Ms. Carson ............................. ........... X ............. Mr. Gillmor ............................ ........... X ...........

Mr. Sherman .......................... ........... X ............. Mr. LaTourette ....................... X ........... ...........

Mr. Meeks .............................. ........... X ............. Mr. Manzullo ......................... X ........... ...........

Mr. Moore (KS) ....................... ........... X ............. Mr. Jones ............................... X ........... ...........

Mr. Capuano .......................... ........... X ............. Mrs. Biggert .......................... ........... ........... X 

Mr. Hinojosa ........................... ........... X ............. Mr. Shays .............................. ........... ........... ...........

Mr. Clay ................................. ........... X ............. Mr. Miller (CA) ...................... X ........... ...........

Mrs. McCarthy ........................ ........... X ............. Mrs. Capito ........................... X ........... ...........

Mr. Baca ................................ ........... ........... ............. Mr. Feeney ............................. X ........... ...........

Mr. Lynch ............................... ........... X ............. Mr. Hensarling ...................... ........... ........... ...........

Mr. Miller (NC) ....................... ........... X ............. Mr. Garrett (NJ) ..................... X ........... ...........

Mr. Scott ................................ ........... X ............. Ms. Brown-Waite ................... ........... X ...........

Mr. Green ............................... ........... X ............. Mr. Barrett (SC) .................... X ........... ...........

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RECORD VOTE NO. FC–15—Continued 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Cleaver ............................ ........... X ............. Mr. Renzi ............................... X ........... ...........

Ms. Bean ................................ ........... X ............. Mr. Gerlach ........................... X ........... ...........

Ms. Moore (WI) ....................... ........... X ............. Mr. Pearce ............................. X ........... ...........

Mr. Davis (TN) ....................... ........... ........... ............. Mr. Neugebauer ..................... X ........... ...........

Mr. Sires ................................ ........... X ............. Mr. Price (GA) ....................... X ........... ...........

Mr. Hodes ............................... ........... X ............. Mr. Davis (KY) ....................... X ........... ...........

Mr. Ellison .............................. ........... X ............. Mr. McHenry .......................... X ........... ...........

Mr. Klein ................................ ........... X ............. Mr. Campbell ........................ X ........... ...........

Mr. Mahoney (FL) ................... ........... X ............. Mr. Putnam ........................... X ........... ...........

Mr. Wilson .............................. ........... X ............. Mrs. Bachmann ..................... X ........... ...........

Mr. Perlmutter ........................ ........... X ............. Mr. Roskam ........................... X ........... ...........

Mr. Murphy ............................. ........... X ............. Mr. Marchant ........................ X ........... ...........

Mr. Donnelly ........................... ........... X .............

Mr. Wexler .............................. ........... X .............

Mr. Marshall .......................... ........... X .............

Mr. Boren ............................... ........... X .............

An amendment by Mr. Pearce, No. 6, on compensation to non-executives paid over $1 million, was not agreed to by a record vote 

of 15 yeas, 47 nays, and 4 present (Record vote FC–16): 

RECORD VOTE NO. FC–16 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. ........... X ............. Mr. Bachus ........................... ........... X .............

Mr. Kanjorski ......................... ........... ........... ............. Mr. Baker ............................. ........... ........... .............

Ms. Waters ............................ ........... X ............. Ms. Pryce (OH) ..................... ........... X .............

Mrs. Maloney ......................... ........... X ............. Mr. Castle ............................ ........... X .............

Mr. Gutierrez ......................... ........... X ............. Mr. King (NY) ....................... ........... X .............

Ms. Vela ́zquez ....................... ........... X ............. Mr. Royce ............................. ........... X .............

Mr. Watt ................................ ........... X ............. Mr. Lucas ............................. ........... X .............

Mr. Ackerman ........................ ........... X ............. Mr. Paul ............................... ........... X .............

Ms. Carson ............................ ........... X ............. Mr. Gillmor ........................... ........... X .............

Mr. Sherman ......................... ........... X ............. Mr. LaTourette ...................... ........... X .............

Mr. Meeks ............................. ........... X ............. Mr. Manzullo ........................ ........... X .............

Mr. Moore (KS) ...................... ........... X ............. Mr. Jones .............................. ........... X .............

Mr. Capuano ......................... ........... X ............. Mrs. Biggert ......................... ........... ........... X 

Mr. Hinojosa .......................... ........... X ............. Mr. Shays ............................. X ........... .............

Mr. Clay ................................ ........... X ............. Mr. Miller (CA) ..................... X ........... .............

Mrs. McCarthy ....................... ........... X ............. Mrs. Capito .......................... ........... X .............

Mr. Baca ............................... ........... ........... ............. Mr. Feeney ............................ ........... ........... X 

Mr. Lynch .............................. ........... X ............. Mr. Hensarling ..................... ........... ........... .............

Mr. Miller (NC) ...................... ........... X ............. Mr. Garrett (NJ) .................... ........... ........... X 

Mr. Scott ............................... ........... X ............. Ms. Brown-Waite .................. ........... ........... X 

Mr. Green .............................. ........... X ............. Mr. Barrett (SC) ................... X ........... .............

Mr. Cleaver ........................... ........... X ............. Mr. Renzi .............................. X ........... .............

Ms. Bean ............................... ........... X ............. Mr. Gerlach .......................... X ........... .............

Ms. Moore (WI) ...................... ........... X ............. Mr. Pearce ............................ X ........... .............

Mr. Davis (TN) ...................... ........... X ............. Mr. Neugebauer .................... X ........... .............

Mr. Sires ............................... ........... X ............. Mr. Price (GA) ...................... X ........... .............

Mr. Hodes .............................. ........... X ............. Mr. Davis (KY) ...................... X ........... .............

Mr. Ellison ............................. ........... X ............. Mr. McHenry ......................... X ........... .............

Mr. Klein ............................... ........... X ............. Mr. Campbell ....................... X ........... .............

Mr. Mahoney (FL) .................. ........... X ............. Mr. Putnam .......................... X ........... .............

Mr. Wilson ............................. ........... X ............. Mrs. Bachmann .................... X ........... .............

Mr. Perlmutter ....................... ........... X ............. Mr. Roskam .......................... X ........... .............

Mr. Murphy ............................ ........... X ............. Mr. Marchant ....................... X ........... .............

Mr. Donnelly .......................... ........... X .............

Mr. Wexler ............................. ........... X .............

Mr. Marshall ......................... ........... X .............

Mr. Boren .............................. ........... X .............

mstockstill on PROD1PC66 with HEARING

9 

An amendment by Mr. Pearce, No. 7, regarding compensation to individuals making over $1 million, was not agreed to by a record 

vote of 11 yeas, 52 nays, and 2 present (Record note FC–17): 

RECORD VOTE NO. FC–17 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. ........... X ............. Mr. Bachus ........................... ........... X .............

Mr. Kanjorski ......................... ........... ........... ............. Mr. Baker ............................. ........... ........... .............

Ms. Waters ............................ ........... X ............. Ms. Pryce (OH) ..................... ........... X .............

Mrs. Maloney ......................... ........... X ............. Mr. Castle ............................ ........... X .............

Mr. Gutierrez ......................... ........... X ............. Mr. King (NY) ....................... ........... X .............

Ms. Vela ́zquez ....................... ........... X ............. Mr. Royce ............................. ........... X .............

Mr. Watt ................................ ........... X ............. Mr. Lucas ............................. ........... X .............

Mr. Ackerman ........................ ........... X ............. Mr. Paul ............................... ........... X .............

Ms. Carson ............................ ........... X ............. Mr. Gillmor ........................... ........... X .............

Mr. Sherman ......................... ........... X ............. Mr. LaTourette ...................... ........... X .............

Mr. Meeks ............................. ........... X ............. Mr. Manzullo ........................ ........... X .............

Mr. Moore (KS) ...................... ........... X ............. Mr. Jones .............................. ........... X .............

Mr. Capuano ......................... ........... X ............. Mrs. Biggert ......................... ........... ........... X 

Mr. Hinojosa .......................... ........... X ............. Mr. Shays ............................. ........... X .............

Mr. Clay ................................ ........... X ............. Mr. Miller (CA) ..................... ........... X .............

Mrs. McCarthy ....................... ........... X ............. Mrs. Capito .......................... ........... X .............

Mr. Baca ............................... ........... ........... ............. Mr. Feeney ............................ ........... ........... X 

Mr. Lynch .............................. ........... X ............. Mr. Hensarling ..................... ........... ........... .............

Mr. Miller (NC) ...................... ........... X ............. Mr. Garrett (NJ) .................... ........... ........... .............

Mr. Scott ............................... ........... X ............. Ms. Brown-Waite .................. ........... X .............

Mr. Green .............................. ........... X ............. Mr. Barrett (SC) ................... X ........... .............

Mr. Cleaver ........................... ........... X ............. Mr. Renzi .............................. X ........... .............

Ms. Bean ............................... ........... X ............. Mr. Gerlach .......................... ........... X .............

Ms. Moore (WI) ...................... ........... X ............. Mr. Pearce ............................ X ........... .............

Mr. Davis (TN) ...................... ........... X ............. Mr. Neugebauer .................... ........... X .............

Mr. Sires ............................... ........... X ............. Mr. Price (GA) ...................... X ........... .............

Mr. Hodes .............................. ........... X ............. Mr. Davis (KY) ...................... X ........... .............

Mr. Ellison ............................. ........... X ............. Mr. McHenry ......................... X ........... .............

Mr. Klein ............................... ........... X ............. Mr. Campbell ....................... X ........... .............

Mr. Mahoney (FL) .................. ........... X ............. Mr. Putnam .......................... X ........... .............

Mr. Wilson ............................. ........... X ............. Mrs. Bachmann .................... X ........... .............

Mr. Perlmutter ....................... ........... X ............. Mr. Roskam .......................... X ........... .............

Mr. Murphy ............................ ........... X ............. Mr. Marchant ....................... X ........... .............

Mr. Donnelly .......................... ........... X .............

Mr. Wexler ............................. ........... X .............

Mr. Marshall ......................... ........... X .............

Mr. Boren .............................. ........... X .............

An amendment by Mr. Putnam, No. 8, on deferred compensation 

exemption, was not agreed to by a record vote of 28 yeas, 38 nays, 

and 1 present (Record vote FC–18): 

RECORD VOTE NO. FC–18 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. ........... X ............. Mr. Bachus ........................... X ........... .............

Mr. Kanjorski ......................... ........... ........... ............. Mr. Baker ............................. ........... ........... .............

Ms. Waters ............................ ........... X ............. Ms. Pryce (OH) ..................... X ........... .............

Mrs. Maloney ......................... ........... X ............. Mr. Castle ............................ X ........... .............

Mr. Gutierrez ......................... ........... X ............. Mr. King (NY) ....................... X ........... .............

Ms. Vela ́zquez ....................... ........... X ............. Mr. Royce ............................. ........... X .............

Mr. Watt ................................ ........... X ............. Mr. Lucas ............................. X ........... .............

Mr. Ackerman ........................ ........... X ............. Mr. Paul ............................... X ........... .............

Ms. Carson ............................ ........... X ............. Mr. Gillmor ........................... X ........... .............

Mr. Sherman ......................... ........... X ............. Mr. LaTourette ...................... X ........... .............

Mr. Meeks ............................. ........... X ............. Mr. Manzullo ........................ X ........... .............

Mr. Moore (KS) ...................... ........... X ............. Mr. Jones .............................. X ........... .............

Mr. Capuano ......................... ........... X ............. Mrs. Biggert ......................... ........... ........... X 

Mr. Hinojosa .......................... ........... X ............. Mr. Shays ............................. X ........... .............

mstockstill on PROD1PC66 with HEARING

10 

RECORD VOTE NO. FC–18—Continued 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Clay ................................ ........... X ............. Mr. Miller (CA) ..................... X ........... .............

Mrs. McCarthy ....................... ........... X ............. Mrs. Capito .......................... X ........... .............

Mr. Baca ............................... ........... X ............. Mr. Feeney ............................ X ........... .............

Mr. Lynch .............................. ........... X ............. Mr. Hensarling ..................... ........... ........... .............

Mr. Miller (NC) ...................... ........... X ............. Mr. Garrett (NJ) .................... X ........... .............

Mr. Scott ............................... ........... X ............. Ms. Brown-Waite .................. ........... X .............

Mr. Green .............................. ........... X ............. Mr. Barrett (SC) ................... X ........... .............

Mr. Cleaver ........................... ........... X ............. Mr. Renzi .............................. X ........... .............

Ms. Bean ............................... ........... X ............. Mr. Gerlach .......................... X ........... .............

Ms. Moore (WI) ...................... ........... X ............. Mr. Pearce ............................ X ........... .............

Mr. Davis (TN) ...................... ........... X ............. Mr. Neugebauer .................... X ........... .............

Mr. Sires ............................... ........... X ............. Mr. Price (GA) ...................... X ........... .............

Mr. Hodes .............................. ........... X ............. Mr. Davis (KY) ...................... X ........... .............

Mr. Ellison ............................. ........... X ............. Mr. McHenry ......................... X ........... .............

Mr. Klein ............................... ........... X ............. Mr. Campbell ....................... X ........... .............

Mr. Mahoney (FL) .................. ........... X ............. Mr. Putnam .......................... X ........... .............

Mr. Wilson ............................. ........... X ............. Mrs. Bachmann .................... X ........... .............

Mr. Perlmutter ....................... ........... X ............. Mr. Roskam .......................... X ........... .............

Mr. Murphy ............................ ........... X ............. Mr. Marchant ....................... X ........... .............

Mr. Donnelly .......................... ........... X .............

Mr. Wexler ............................. ........... X .............

Mr. Marshall ......................... ........... X .............

Mr. Boren .............................. ........... X .............

An amendment by Mr. Campbell, No. 9, on majority-elected 

board exemption, was not agreed to by a record vote of 29 yeas, 37 

nays, and 1 present (Record vote FC–19): 

RECORD VOTE NO. FC–19 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. ........... X ............. Mr. Bachus ........................... X ........... .............

Mr. Kanjorski ......................... ........... ........... ............. Mr. Baker ............................. ........... ........... .............

Ms. Waters ............................ ........... X ............. Ms. Pryce (OH) ..................... X ........... .............

Mrs. Maloney ......................... ........... X ............. Mr. Castle ............................ X ........... .............

Mr. Gutierrez ......................... ........... X ............. Mr. King (NY) ....................... X ........... .............

Ms. Vela ́zquez ....................... ........... X ............. Mr. Royce ............................. X ........... .............

Mr. Watt ................................ ........... X ............. Mr. Lucas ............................. X ........... .............

Mr. Ackerman ........................ ........... X ............. Mr. Paul ............................... X ........... .............

Ms. Carson ............................ ........... X ............. Mr. Gillmor ........................... ........... X .............

Mr. Sherman ......................... ........... X ............. Mr. LaTourette ...................... X ........... .............

Mr. Meeks ............................. ........... X ............. Mr. Manzullo ........................ X ........... .............

Mr. Moore (KS) ...................... ........... X ............. Mr. Jones .............................. X ........... .............

Mr. Capuano ......................... ........... X ............. Mrs. Biggert ......................... ........... ........... X 

Mr. Hinojosa .......................... ........... X ............. Mr. Shays ............................. X ........... .............

Mr. Clay ................................ ........... X ............. Mr. Miller (CA) ..................... X ........... .............

Mrs. McCarthy ....................... ........... X ............. Mrs. Capito .......................... X ........... .............

Mr. Baca ............................... ........... X ............. Mr. Feeney ............................ X ........... .............

Mr. Lynch .............................. ........... X ............. Mr. Hensarling ..................... ........... ........... .............

Mr. Miller (NC) ...................... ........... X ............. Mr. Garrett (NJ) .................... X ........... .............

Mr. Scott ............................... ........... X ............. Ms. Brown-Waite .................. X ........... .............

Mr. Green .............................. ........... X ............. Mr. Barrett (SC) ................... X ........... .............

Mr. Cleaver ........................... ........... X ............. Mr. Renzi .............................. X ........... .............

Ms. Bean ............................... ........... X ............. Mr. Gerlach .......................... X ........... .............

Ms. Moore (WI) ...................... ........... X ............. Mr. Pearce ............................ X ........... .............

Mr. Davis (TN) ...................... ........... X ............. Mr. Neugebauer .................... X ........... .............

Mr. Sires ............................... ........... X ............. Mr. Price (GA) ...................... X ........... .............

Mr. Hodes .............................. ........... X ............. Mr. Davis (KY) ...................... X ........... .............

Mr. Ellison ............................. ........... X ............. Mr. McHenry ......................... X ........... .............

Mr. Klein ............................... ........... X ............. Mr. Campbell ....................... X ........... .............

Mr. Mahoney (FL) .................. ........... X ............. Mr. Putnam .......................... X ........... .............

Mr. Wilson ............................. ........... X ............. Mrs. Bachmann .................... X ........... .............

Mr. Perlmutter ....................... ........... X ............. Mr. Roskam .......................... X ........... .............

mstockstill on PROD1PC66 with HEARING

11 

RECORD VOTE NO. FC–19—Continued 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Murphy ............................ ........... X ............. Mr. Marchant ....................... X ........... .............

Mr. Donnelly .......................... ........... X .............

Mr. Wexler ............................. ........... X .............

Mr. Marshall ......................... ........... X .............

Mr. Boren .............................. ........... X .............

An amendment by Mr. McHenry, No. 11, on shareholder vote, 

was not agreed to by a record vote of 21 yeas, 45 nays, and 1 

present (Record vote FC–20): 

RECORD VOTE NO. FC–20 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. ........... X ............. Mr. Bachus ........................... X ........... .............

Mr. Kanjorski ......................... ........... ........... ............. Mr. Baker ............................. ........... ........... .............

Ms. Waters ............................ ........... X ............. Ms. Pryce (OH) ..................... X ........... .............

Mrs. Maloney ......................... ........... X ............. Mr. Castle ............................ X ........... .............

Mr. Gutierrez ......................... ........... X ............. Mr. King (NY) ....................... X ........... .............

Ms. Vela ́zquez ....................... ........... X ............. Mr. Royce ............................. ........... X .............

Mr. Watt ................................ ........... X ............. Mr. Lucas ............................. X ........... .............

Mr. Ackerman ........................ ........... X ............. Mr. Paul ............................... ........... X .............

Ms. Carson ............................ ........... X ............. Mr. Gillmor ........................... ........... ........... .............

Mr. Sherman ......................... ........... X ............. Mr. LaTourette ...................... ........... X .............

Mr. Meeks ............................. ........... X ............. Mr. Manzullo ........................ X ........... .............

Mr. Moore (KS) ...................... ........... X ............. Mr. Jones .............................. ........... X .............

Mr. Capuano ......................... ........... X ............. Mrs. Biggert ......................... ........... ........... X 

Mr. Hinojosa .......................... ........... X ............. Mr. Shays ............................. ........... X .............

Mr. Clay ................................ ........... X ............. Mr. Miller (CA) ..................... X ........... .............

Mrs. McCarthy ....................... ........... X ............. Mrs. Capito .......................... X ........... .............

Mr. Baca ............................... ........... X ............. Mr. Feeney ............................ X ........... .............

Mr. Lynch .............................. ........... X ............. Mr. Hensarling ..................... X ........... .............

Mr. Miller (NC) ...................... ........... X ............. Mr. Garrett (NJ) .................... X ........... .............

Mr. Scott ............................... ........... X ............. Ms. Brown-Waite .................. ........... X .............

Mr. Green .............................. ........... X ............. Mr. Barrett (SC) ................... X ........... .............

Mr. Cleaver ........................... ........... X ............. Mr. Renzi .............................. X ........... .............

Ms. Bean ............................... ........... X ............. Mr. Gerlach .......................... ........... X .............

Ms. Moore (WI) ...................... ........... X ............. Mr. Pearce ............................ X ........... .............

Mr. Davis (TN) ...................... ........... X ............. Mr. Neugebauer .................... X ........... .............

Mr. Sires ............................... ........... X ............. Mr. Price (GA) ...................... X ........... .............

Mr. Hodes .............................. ........... X ............. Mr. Davis (KY) ...................... X ........... .............

Mr. Ellison ............................. ........... X ............. Mr. McHenry ......................... X ........... .............

Mr. Klein ............................... ........... X ............. Mr. Campbell ....................... ........... X .............

Mr. Mahoney (FL) .................. ........... X ............. Mr. Putnam .......................... X ........... .............

Mr. Wilson ............................. ........... X ............. Mrs. Bachmann .................... X ........... .............

Mr. Perlmutter ....................... ........... X ............. Mr. Roskam .......................... ........... X .............

Mr. Murphy ............................ ........... X ............. Mr. Marchant ....................... X ........... .............

Mr. Donnelly .......................... ........... X .............

Mr. Wexler ............................. ........... X .............

Mr. Marshall ......................... ........... X .............

Mr. Boren .............................. ........... X .............

An amendment by Mr. McHenry, No. 12, on disclosure of vote to 

pension fund beneficiaries, was not agreed to by a record vote of 

26 yeas, 39 nays, and 1 present (Record vote FC–21): 

RECORD VOTE NO. FC–21 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .................................... ........... X ............. Mr. Bachus ..................... X ........... .............

Mr. Kanjorski .............................. ........... ........... ............. Mr. Baker ........................ ........... ........... .............

Ms. Waters ................................. ........... X ............. Ms. Pryce (OH) ................ X ........... .............

Mrs. Maloney .............................. ........... X ............. Mr. Castle ....................... X ........... .............

mstockstill on PROD1PC66 with HEARING

12 

RECORD VOTE NO. FC–21—Continued 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Gutierrez .............................. ........... X ............. Mr. King (NY) .................. X ........... .............

Ms. Vela ́zquez ............................ ........... X ............. Mr. Royce ........................ ........... X .............

Mr. Watt ..................................... ........... X ............. Mr. Lucas ........................ X ........... .............

Mr. Ackerman ............................. ........... X ............. Mr. Paul .......................... ........... X .............

Ms. Carson ................................. ........... X ............. Mr. Gillmor ...................... ........... ........... .............

Mr. Sherman .............................. ........... X ............. Mr. LaTourette ................. X ........... .............

Mr. Meeks ................................... ........... X ............. Mr. Manzullo ................... X ........... .............

Mr. Moore (KS) ........................... ........... X ............. Mr. Jones ......................... X ........... .............

Mr. Capuano .............................. ........... X ............. Mrs. Biggert .................... ........... ........... X 

Mr. Hinojosa ............................... ........... X ............. Mr. Shays ........................ X ........... .............

Mr. Clay ...................................... ........... X ............. Mr. Miller (CA) ................ X ........... .............

Mrs. McCarthy ............................ ........... X ............. Mrs. Capito ..................... X ........... .............

Mr. Baca .................................... ........... X ............. Mr. Feeney ....................... X ........... .............

Mr. Lynch ................................... ........... X ............. Mr. Hensarling ................ X ........... .............

Mr. Miller (NC) ........................... ........... X ............. Mr. Garrett (NJ) ............... X ........... .............

Mr. Scott .................................... ........... X ............. Ms. Brown-Waite ............. X ........... .............

Mr. Green ................................... ........... X ............. Mr. Barrett (SC) .............. X ........... .............

Mr. Cleaver ................................. ........... X ............. Mr. Renzi ......................... X ........... .............

Ms. Bean .................................... ........... X ............. Mr. Gerlach ..................... X ........... .............

Ms. Moore (WI) ........................... ........... X ............. Mr. Pearce ....................... ........... ........... .............

Mr. Davis (TN) ............................ ........... X ............. Mr. Neugebauer .............. X ........... .............

Mr. Sires ..................................... ........... X ............. Mr. Price (GA) ................. X ........... .............

Mr. Hodes ................................... ........... X ............. Mr. Davis (KY) ................ X ........... .............

Mr. Ellison .................................. ........... X ............. Mr. McHenry .................... X ........... .............

Mr. Klein ..................................... ........... X ............. Mr. Campbell .................. ........... X .............

Mr. Mahoney (FL) ....................... ........... X ............. Mr. Putnam ..................... X ........... .............

Mr. Wilson .................................. ........... X ............. Mrs. Bachmann .............. X ........... .............

Mr. Perlmutter ............................ ........... X ............. Mr. Roskam ..................... X ........... .............

Mr. Murphy ................................. ........... X ............. Mr. Marchant .................. X ........... .............

Mr. Donnelly ............................... ........... X .............

Mr. Wexler .................................. ........... X .............

Mr. Marshall ............................... ........... X .............

Mr. Boren ................................... ........... X .............

An amendment by Mr. Garrett, No. 13, setting conditions triggering a vote, was not agreed to by a record vote of 28 yeas, 39 

nays, and 1 present (Record vote FC–22): 

RECORD VOTE NO. FC–22 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. ........... X ............. Mr. Bachus ........................... X ........... .............

Mr. Kanjorski ......................... ........... ........... ............. Mr. Baker ............................. ........... ........... .............

Ms. Waters ............................ ........... X ............. Ms. Pryce (OH) ..................... X ........... .............

Mrs. Maloney ......................... ........... X ............. Mr. Castle ............................ X ........... .............

Mr. Gutierrez ......................... ........... X ............. Mr. King (NY) ....................... X ........... .............

Ms. Vela ́zquez ....................... ........... X ............. Mr. Royce ............................. X ........... .............

Mr. Watt ................................ ........... X ............. Mr. Lucas ............................. X ........... .............

Mr. Ackerman ........................ ........... X ............. Mr. Paul ............................... X ........... .............

Ms. Carson ............................ ........... X ............. Mr. Gillmor ........................... ........... X .............

Mr. Sherman ......................... ........... X ............. Mr. LaTourette ...................... X ........... .............

Mr. Meeks ............................. ........... X ............. Mr. Manzullo ........................ ........... X .............

Mr. Moore (KS) ...................... ........... X ............. Mr. Jones .............................. ........... X .............

Mr. Capuano ......................... ........... X ............. Mrs. Biggert ......................... ........... ........... X 

Mr. Hinojosa .......................... ........... X ............. Mr. Shays ............................. X ........... .............

Mr. Clay ................................ ........... X ............. Mr. Miller (CA) ..................... X ........... .............

Mrs. McCarthy ....................... ........... X ............. Mrs. Capito .......................... X ........... .............

Mr. Baca ............................... ........... X ............. Mr. Feeney ............................ X ........... .............

Mr. Lynch .............................. ........... X ............. Mr. Hensarling ..................... X ........... .............

Mr. Miller (NC) ...................... ........... X ............. Mr. Garrett (NJ) .................... X ........... .............

Mr. Scott ............................... ........... X ............. Ms. Brown-Waite .................. X ........... .............

Mr. Green .............................. ........... X ............. Mr. Barrett (SC) ................... X ........... .............

Mr. Cleaver ........................... ........... X ............. Mr. Renzi .............................. X ........... .............

mstockstill on PROD1PC66 with HEARING

13 

RECORD VOTE NO. FC–22—Continued 

Representative Aye Nay Present Representative Aye Nay Present 

Ms. Bean ............................... ........... X ............. Mr. Gerlach .......................... X ........... .............

Ms. Moore (WI) ...................... ........... X ............. Mr. Pearce ............................ X ........... .............

Mr. Davis (TN) ...................... ........... X ............. Mr. Neugebauer .................... X ........... .............

Mr. Sires ............................... ........... X ............. Mr. Price (GA) ...................... X ........... .............

Mr. Hodes .............................. ........... X ............. Mr. Davis (KY) ...................... X ........... .............

Mr. Ellison ............................. ........... X ............. Mr. McHenry ......................... X ........... .............

Mr. Klein ............................... ........... X ............. Mr. Campbell ....................... X ........... .............

Mr. Mahoney (FL) .................. ........... X ............. Mr. Putnam .......................... X ........... .............

Mr. Wilson ............................. ........... X ............. Mrs. Bachmann .................... X ........... .............

Mr. Perlmutter ....................... ........... X ............. Mr. Roskam .......................... X ........... .............

Mr. Murphy ............................ ........... X ............. Mr. Marchant ....................... X ........... .............

Mr. Donnelly .......................... ........... X .............

Mr. Wexler ............................. ........... X .............

Mr. Marshall ......................... ........... X .............

Mr. Boren .............................. ........... X .............

An amendment by Mr. Garrett, No. 14, setting conditions triggering a vote, was not agreed to by a record vote of 28 yeas, 39 

nays, and 1 present (Record vote FC–23): 

RECORD VOTE NO. FC–23 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. ........... X ............. Mr. Bachus ........................... X ........... .............

Mr. Kanjorski ......................... ........... ........... ............. Mr. Baker ............................. ........... ........... .............

Ms. Waters ............................ ........... X ............. Ms. Pryce (OH) ..................... X ........... .............

Mrs. Maloney ......................... ........... X ............. Mr. Castle ............................ X ........... .............

Mr. Gutierrez ......................... ........... X ............. Mr. King (NY) ....................... X ........... .............

Ms. Vela ́zquez ....................... ........... X ............. Mr. Royce ............................. X ........... .............

Mr. Watt ................................ ........... X ............. Mr. Lucas ............................. X ........... .............

Mr. Ackerman ........................ ........... X ............. Mr. Paul ............................... X ........... .............

Ms. Carson ............................ ........... X ............. Mr. Gillmor ........................... ........... X .............

Mr. Sherman ......................... ........... X ............. Mr. LaTourette ...................... X ........... .............

Mr. Meeks ............................. ........... X ............. Mr. Manzullo ........................ ........... X .............

Mr. Moore (KS) ...................... ........... X ............. Mr. Jones .............................. ........... X .............

Mr. Capuano ......................... ........... X ............. Mrs. Biggert ......................... ........... ........... X 

Mr. Hinojosa .......................... ........... X ............. Mr. Shays ............................. X ........... .............

Mr. Clay ................................ ........... X ............. Mr. Miller (CA) ..................... X ........... .............

Mrs. McCarthy ....................... ........... X ............. Mrs. Capito .......................... X ........... .............

Mr. Baca ............................... ........... X ............. Mr. Feeney ............................ X ........... .............

Mr. Lynch .............................. ........... X ............. Mr. Hensarling ..................... X ........... .............

Mr. Miller (NC) ...................... ........... X ............. Mr. Garrett (NJ) .................... X ........... .............

Mr. Scott ............................... ........... X ............. Ms. Brown-Waite .................. X ........... .............

Mr. Green .............................. ........... X ............. Mr. Barrett (SC) ................... X ........... .............

Mr. Cleaver ........................... ........... X ............. Mr. Renzi .............................. X ........... .............

Ms. Bean ............................... ........... X ............. Mr. Gerlach .......................... X ........... .............

Ms. Moore (WI) ...................... ........... X ............. Mr. Pearce ............................ X ........... .............

Mr. Davis (TN) ...................... ........... X ............. Mr. Neugebauer .................... X ........... .............

Mr. Sires ............................... ........... X ............. Mr. Price (GA) ...................... X ........... .............

Mr. Hodes .............................. ........... X ............. Mr. Davis (KY) ...................... X ........... .............

Mr. Ellison ............................. ........... X ............. Mr. McHenry ......................... X ........... .............

Mr. Klein ............................... ........... X ............. Mr. Campbell ....................... X ........... .............

Mr. Mahoney (FL) .................. ........... X ............. Mr. Putnam .......................... X ........... .............

Mr. Wilson ............................. ........... X ............. Mrs. Bachmann .................... X ........... .............

Mr. Perlmutter ....................... ........... X ............. Mr. Roskam .......................... X ........... .............

Mr. Murphy ............................ ........... X ............. Mr. Marchant ....................... X ........... .............

Mr. Donnelly .......................... ........... X .............

Mr. Wexler ............................. ........... X .............

Mr. Marshall ......................... ........... X .............

Mr. Boren .............................. ........... X .............

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14 

An amendment by Mr. Price (GA), No. 15, ensuring fair competition and level playing field, was not agreed to by a record vote of 

27 yeas, 32 nays, and 1 present (Record vote FC–24): 

RECORD VOTE NO. FC–24 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. ........... X ............. Mr. Bachus ........................... X ........... .............

Mr. Kanjorski ......................... ........... ........... ............. Mr. Baker ............................. ........... ........... .............

Ms. Waters ............................ ........... X ............. Ms. Pryce (OH) ..................... X ........... .............

Mrs. Maloney ......................... ........... ........... ............. Mr. Castle ............................ X ........... .............

Mr. Gutierrez ......................... ........... X ............. Mr. King (NY) ....................... X ........... .............

Ms. Vela ́zquez ....................... ........... X ............. Mr. Royce ............................. X ........... .............

Mr. Watt ................................ ........... X ............. Mr. Lucas ............................. X ........... .............

Mr. Ackerman ........................ ........... X ............. Mr. Paul ............................... X ........... .............

Ms. Carson ............................ ........... X ............. Mr. Gillmor ........................... X ........... .............

Mr. Sherman ......................... ........... X ............. Mr. LaTourette ...................... X ........... .............

Mr. Meeks ............................. ........... X ............. Mr. Manzullo ........................ ........... ........... .............

Mr. Moore (KS) ...................... ........... X ............. Mr. Jones .............................. X ........... .............

Mr. Capuano ......................... ........... X ............. Mrs. Biggert ......................... ........... ........... X 

Mr. Hinojosa .......................... ........... X ............. Mr. Shays ............................. ........... ........... .............

Mr. Clay ................................ ........... X ............. Mr. Miller (CA) ..................... X ........... .............

Mrs. McCarthy ....................... ........... X ............. Mrs. Capito .......................... X ........... .............

Mr. Baca ............................... ........... X ............. Mr. Feeney ............................ X ........... .............

Mr. Lynch .............................. ........... X ............. Mr. Hensarling ..................... X ........... .............

Mr. Miller (NC) ...................... ........... X ............. Mr. Garrett (NJ) .................... X ........... .............

Mr. Scott ............................... ........... X ............. Ms. Brown-Waite .................. X ........... .............

Mr. Green .............................. ........... X ............. Mr. Barrett (SC) ................... X ........... .............

Mr. Cleaver ........................... ........... X ............. Mr. Renzi .............................. X ........... .............

Ms. Bean ............................... ........... X ............. Mr. Gerlach .......................... X ........... .............

Ms. Moore (WI) ...................... ........... X ............. Mr. Pearce ............................ X ........... .............

Mr. Davis (TN) ...................... ........... X ............. Mr. Neugebauer .................... ........... ........... .............

Mr. Sires ............................... ........... X ............. Mr. Price (GA) ...................... X ........... .............

Mr. Hodes .............................. ........... X ............. Mr. Davis (KY) ...................... ........... X .............

Mr. Ellison ............................. ........... X ............. Mr. McHenry ......................... ........... X .............

Mr. Klein ............................... ........... X ............. Mr. Campbell ....................... X ........... .............

Mr. Mahoney (FL) .................. ........... X ............. Mr. Putnam .......................... X ........... .............

Mr. Wilson ............................. ........... X ............. Mrs.Bachmann ..................... X ........... .............

Mr. Perlmutter ....................... ........... ........... ............. Mr. Roskam .......................... X ........... .............

Mr. Murphy ............................ ........... X ............. Mr. Marchant ....................... ........... ........... .............

Mr. Donnelly .......................... ........... ........... .............

Mr. Wexler ............................. ........... X .............

Mr. Marshall ......................... ........... X .............

Mr. Boren .............................. ........... ........... .............

An amendment by Mr. Price, No. 16, providing relief from cost 

of new burdensome regulation, was not agreed to by a record vote 

of 20 yeas, 42 nays, and 1 present (Record vote FC–25): 

RECORD VOTE NO. FC–25 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. ........... X ............. Mr. Bachus ........................... ........... X .............

Mr. Kanjorski ......................... ........... ........... ............. Mr. Baker ............................. ........... ........... .............

Ms. Waters ............................ ........... X ............. Ms. Pryce (OH) ..................... X ........... .............

Mrs. Maloney ......................... ........... X ............. Mr. Castle ............................ X ........... .............

Mr. Gutierrez ......................... ........... X ............. Mr. King (NY) ....................... ........... X .............

Ms. Vela ́zquez ....................... ........... X ............. Mr. Royce ............................. ........... X .............

Mr. Watt ................................ ........... X ............. Mr. Lucas ............................. ........... ........... .............

Mr. Ackerman ........................ ........... X ............. Mr. Paul ............................... ........... X .............

Ms. Carson ............................ ........... X ............. Mr. Gillmor ........................... ........... X .............

Mr. Sherman ......................... ........... X ............. Mr. LaTourette ...................... ........... X .............

Mr. Meeks ............................. ........... X ............. Mr. Manzullo ........................ ........... X .............

Mr. Moore (KS) ...................... ........... X ............. Mr. Jones .............................. ........... X .............

Mr. Capuano ......................... ........... X ............. Mrs. Biggert ......................... ........... ........... X 

Mr. Hinojosa .......................... ........... X ............. Mr. Shays ............................. ........... ........... .............

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15 

RECORD VOTE NO. FC–25—Continued 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Clay ................................ ........... X ............. Mr. Miller (CA) ..................... X ........... .............

Mrs. McCarthy ....................... ........... X ............. Mrs. Capito .......................... X ........... .............

Mr. Baca ............................... ........... X ............. Mr. Feeney ............................ X ........... .............

Mr. Lynch .............................. ........... X ............. Mr. Hensarling ..................... X ........... .............

Mr. Miller (NC) ...................... ........... X ............. Mr. Garrett (NJ) .................... X ........... .............

Mr. Scott ............................... ........... X ............. Ms. Brown-Waite .................. X ........... .............

Mr. Green .............................. ........... X ............. Mr. Barrett (SC) ................... X ........... .............

Mr. Cleaver ........................... ........... X ............. Mr. Renzi .............................. X ........... .............

Ms. Bean ............................... ........... X ............. Mr. Gerlach .......................... X ........... .............

Ms. Moore (WI) ...................... ........... X ............. Mr. Pearce ............................ X ........... .............

Mr. Davis (TN) ...................... ........... X ............. Mr. Neugebauer .................... X ........... .............

Mr. Sires ............................... ........... X ............. Mr. Price (GA) ...................... X ........... .............

Mr. Hodes .............................. ........... X ............. Mr. Davis (KY) ...................... X ........... .............

Mr. Ellison ............................. ........... X ............. Mr. McHenry ......................... X ........... .............

Mr. Klein ............................... ........... X ............. Mr. Campbell ....................... X ........... .............

Mr. Mahoney (FL) .................. ........... X ............. Mr. Putnam .......................... X ........... .............

Mr. Wilson ............................. ........... X ............. Mrs. Bachmann .................... X ........... .............

Mr. Perlmutter ....................... ........... ........... ............. Mr. Roskam .......................... X ........... .............

Mr. Murphy ............................ ........... X ............. Mr. Marchant ....................... ........... ........... .............

Mr. Donnelly .......................... ........... X .............

Mr. Wexler ............................. ........... X .............

Mr. Marshall ......................... ........... X .............

Mr. Boren .............................. ........... ........... .............

The following other amendments were also considered by the 

Committee: 

An amendment by Mr. Frank, No. 1, delaying votes to 2009 and 

providing a rule of construction, was agreed to, as amended, by 

voice vote. 

An amendment by Mr. Shays, No. 1(a), to the amendment by Mr. 

Frank, regarding fiduciary duty by such board, was agreed to by 

voice vote. 

An amendment by Mr. Roskam, No. 2, on additional disclosures, 

was offered and withdrawn. 

An amendment by Mr. Price, No. 3, ensuring fair competition 

and level playing field, was offered and withdrawn. 

An amendment by Mr. McHenry, No. 10, on votes cast on behalf 

of pension funds, had a point of order sustained against its consideration. 

COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee has held hearings and made 

findings that are reflected in this report. 

PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee establishes the following performance related goals and objectives for this legislation: 

The goal of H.R. 1257, the Shareholder Vote on Executive Compensation Act, is to provide shareholders with a meaningful say on 

their company’s executive compensation practices without setting 

any caps on executive pay or micromanaging the company. It will 

do this by (1) requiring that public companies include in their annual proxy a nonbinding shareholder vote on the executive compensation disclosures already required by the Securities and Exmstockstill on PROD1PC66 with HEARING

16 

change Commission; and (2) requiring a separate shareholder vote 

for additional compensation that is tied to the sale or purchase of 

a company. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of new budget authority, entitlement authority, or tax expenditures or revenues contained in the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act. 

COMMITTEE COST ESTIMATE

The Committee adopts as its own the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATE

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974: 

U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, April 13, 2007. 

Hon. BARNEY FRANK, 

Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 1257, the Shareholder 

Vote on Executive Compensation Act. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Susan Willie. 

Sincerely, 

PETER R. ORSZAG, 

Director. 

Enclosure. 

H.R. 1257—Shareholder Vote on Executive Compensation Act 

H.R. 1257 would require all companies that trade stock on public 

exchanges to allow shareholders to vote annually to approve the 

compensation received by executives. Additionally, public companies, in the event of a proposed sale, acquisition, merger, or consolidation, would be required to allow shareholders to vote on compensation agreements between the entity acquiring the company 

and principal executive officers of the company to be acquired. In 

either case, the results of the shareholder votes would not be binding on the board of directors, and would apply only to shareholders’

meetings occurring on or after January 1, 2009. The bill would require the Securities and Exchange Commission (SEC) to develop 

regulations to implement the bill’s requirements. 

mstockstill on PROD1PC66 with HEARING

17 

Based on information from the SEC, CBO estimates that implementing H.R. 1257 would cost about $1 million in 2008 to develop 

regulations, and less than $500,000 per year thereafter to review 

and monitor compliance by companies affected by the regulations. 

Such spending would be subject to the availability of appropriated 

funds; enacting the bill would not affect direct spending or receipts. 

H.R. 1257 contains no intergovernmental mandates as defined in 

the Unfunded Mandates Reform Act (UMRA) and would not affect 

the budgets of state, local, or tribal governments. 

H.R. 1257 would impose private-sector mandates, as defined in 

UMRA, on publicly traded companies and entities making certain 

proposals by proxy solicitation. The bill would require them, beginning on January 1, 2009, to allow a nonbinding vote by shareholders on certain executive compensation and to make certain disclosures related to such compensation. Based on information from 

industry and government sources, CBO estimates that the cost to 

comply with those mandates would fall below the annual threshold 

established by UMRA ($131 million in 2007, adjusted annually for 

inflation). 

According to government sources, about 6,000 publicly traded 

companies would be required to provide shareholder votes on executive compensation each year. The cost of the mandate would be 

the expenditure to cover any additional programming, paper, printing, postage, and tabulation to allow for the shareholder vote. 

Based on information from industry and government sources, CBO 

expects that the incremental cost to provide shareholder voting 

would fall well below the annual threshold for private-sector mandates. 

The bill also would require any entity making a proposal by 

proxy solicitation regarding an acquisition, merger, sale, or other 

disposition of substantially all the assets of an issuer, to disclose 

in the solicitation materials any agreements or understandings concerning any type of compensation, such as golden parachutes, related to the disposition. In addition, the bill would require those 

entities to allow a separate shareholder vote to approve such agreements or understandings in the proxy solicitation materials containing the disclosure. According to industry and government 

sources, such proxy solicitations occur infrequently. Therefore, CBO 

expects that the incremental cost for the industry to provide the 

disclosures and shareholder voting would be minimal. 

The CBO staff contacts for this estimate are Susan Willie (for 

federal costs) and Paige Piper/Bach (for the private-sector impact). 

This estimate was approved by Peter H. Fontaine, Deputy Assistant Director for Budget Analysis. 

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates Reform Act. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 

mstockstill on PROD1PC66 with HEARING

18 

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee finds that the Constitutional 

Authority of Congress to enact this legislation is provided by Article 1, section 8, clause 1 (relating to the general welfare of the 

United States) and clause 3 (relating to the power to regulate interstate commerce). 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act. 

EARMARK IDENTIFICATION

H.R. 1257 does not contain any congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clause 9 of rule 

XXI. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title 

This section establishes the short title of the bill, the ‘‘Shareholder Vote on Executive Compensation Act.’’

Section 2. Shareholder vote on executive compensation disclosures 

This section requires that public companies include, in their annual proxies, a nonbinding shareholder vote on their executive compensation disclosures; and hold an additional nonbinding advisory 

vote if the company awards a new golden parachute package while 

simultaneously negotiating the purchase or sale of the company. 

The annual nonbinding advisory vote is designed to give shareholders a mechanism for supporting or opposing a company’s executive compensation plan without micromanaging the company. 

Knowing that they will be subject to some collective shareholder action will help give boards more pause before approving a questionable compensation plan. As is the case in other countries, we expect this tool will improve dialogue between management and 

shareholders on compensation and make compensation a more efficient tool for improving/rewarding management performance. 

The rare second vote is designed to help address a CEO’s natural 

conflict of interest when negotiating the price of a company while 

simultaneously negotiating an additional personal exit package 

(e.g., as noted above, a CEO may be willing to sell the company for 

less or pay more for another if he/she personally receives a larger 

package—thereby reducing shareholder value). This provision 

would not apply to long-disclosed ‘‘change in ownership’’ agreements—and would only apply to new provisions added while negotiating the sale/purchase. 

This section also clarifies that the results of the shareholder vote 

(e.g., approval or disapproval) will be nonbinding on a company’s 

board or its shareholders. The results will create no new duties on 

the board nor be used to limit any other mechanisms available to 

mstockstill on PROD1PC66 with HEARING

19 

shareholders such as to offer other executive compensation proposals on their company’s proxy. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (new matter is printed in italics 

and existing law in which no change is proposed is shown in 

roman): 

SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 

1934 

SEC. 16. DIRECTORS, OFFICERS, AND PRINCIPAL STOCKHOLDERS. 

(a) * * * 

* * * * * * * 

(h) ANNUAL SHAREHOLDER APPROVAL OF EXECUTIVE COMPENSA- TION.—

(1) IN GENERAL.— Any proxy or consent or authorization for 

an annual or other meeting of the shareholders occurring on or 

after January 1, 2009, shall permit a separate shareholder vote 

to approve the compensation of executives as disclosed pursuant 

to the Commission’s compensation disclosure rules (which disclosure shall include the compensation discussion and analysis, 

the compensation tables, and any related material). The shareholder vote shall not be binding on the board of directors and 

shall not be construed as overruling a decision by such board, 

nor to create or imply any additional fiduciary duty by such 

board, nor shall such vote be construed to restrict or limit the 

ability of shareholders to make proposals for inclusion in such 

proxy materials related to executive compensation. 

(2) SHAREHOLDER APPROVAL OF GOLDEN PARACHUTE COM- PENSATION.— (A) DISCLOSURE.— In any proxy solicitation material for 

an annual or other meeting of the shareholders occurring 

on or after January 1, 2009, that concerns an acquisition, 

merger, consolidation, or proposed sale or other disposition 

of substantially all the assets of an issuer, the person making such solicitation shall disclose in the proxy solicitation 

material, in a clear and simple form in accordance with 

regulations of the Commission, any agreements or understandings that such person has with any principal executive officers of such issuer (or of the acquiring issuer, if 

such issuer is not the acquiring issuer) concerning any type 

of compensation (whether present, deferred, or contingent) 

that are based on or otherwise relate to the acquisition, 

merger, consolidation, sale, or other disposition, and that 

have not been subject to a shareholder vote under paragraph (1). 

(B) SHAREHOLDER APPROVAL.— The proxy solicitation 

material containing the disclosure required by subparagraph (A) shall require a separate shareholder vote to approve such agreements or understandings. A vote by the 

shareholders shall not be binding on the board of directors 

and shall not be construed as overruling a decision by such 

mstockstill on PROD1PC66 with HEARING

20 

board, nor to create or imply any additional fiduciary duty 

by such board, nor shall such vote be construed to restrict 

or limit the ability of shareholders to make proposals for 

inclusion in such proxy materials related to executive compensation. 

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(21) 

DISSENTING VIEWS ON H.R. 1257 

H.R. 1257 gives the Securities and Exchange Commission (SEC) 

the power to force publicly traded corporations to conduct shareholder votes on non-binding resolutions concerning the compensation packages of Chief Executive Officers (CEOs). Giving the SEC 

the power to require shareholder votes on any aspect of corporate 

governance—even on something as seemingly inconsequential as a 

non-binding resolution—illegitimately expands federal authority 

into questions of private governance. 

In a free market, shareholders who are concerned about CEO 

compensation are free to refuse to invest in corporations that do 

not provide sufficient information regarding how CEO salaries are 

set or do not allow shareholders a say in setting compensation 

packages. Since shareholders are corporations’ owners, the CEO 

and board of directors have a great incentive to respond to shareholders’ demands. In fact, several corporations have recently moved 

to amend the ways they determine executive compensation in order 

to provide increased transparency and accountability to shareholders. 

Some shareholders may not care about a CEO’s compensation 

package; instead they may want to devote time at shareholders’

meetings to reviewing corporate environmental polices or ensuring 

the corporation has ‘‘family-friendly’’ workforce policies. If H.R. 

1257 becomes law, the concerns of those shareholders will take a 

back seat to corporations’ attempts to meet the demands of Congress. 

It is ironic that Congress would concern itself with high salaries 

in the private sector when, according to data collected by the CATO 

Institute, federal employees, on average, make twice as much as 

their private sector counterparts. One of the examples of excessive 

compensation cited by the supporters of the bill is the multi-million 

dollar package paid to the former CEO of Freddie Mac. As a government sponsored enterprise that, along with its counterpart 

Fannie Mae, received almost 20 billion dollars worth of indirect 

federal subsidies in fiscal year 2004 alone, Freddie Mac is hardly 

a poster child for the free market! 

Past government actions have made it more difficult for shareholders to hold CEOs and boards of directors accountable for disregarding shareholder interests by, among other things, wasting 

corporate resources on compensation packages and golden parachutes unrelated to performance. During the 1980s, so-called corporate raiders helped keep corporate management accountable to 

shareholders through devices such as ‘‘junk’’ bonds that made corporate takeovers easier. 

The backlash against corporate raiders included the enactment of 

laws that made it more difficult to launch hostile takeovers. Bruce 

Bartlett, writing in the Washington Times in 2001, commented on 

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22 

the effects of these laws, ‘‘Without the threat of a takeover, managers have been able to go back to ignoring shareholders, treating 

them like a nuisance, and giving themselves bloated salaries and 

perks, with little oversight from corporate boards. Now insulated 

from shareholders once again, managers could engage in unsound 

practices with little fear of punishment for failure.’’ The federal 

‘‘crackdown’’ on corporate raiders, combined with provisions in Sarbanes-Oxley disqualifying the people who are the most capable of 

serving as shareholder watchdogs from serving on corporate 

boards, contributed to the disconnect between CEO salaries and 

creation of shareholder value that is being used to justify another 

expansion of the regulatory state. 

In addition to repealing laws that prevent shareholders from exercising control over corporations, Congress should also examine 

United States monetary policy’s effects on income inequality. When 

the Federal Reserve Board injects credit into the economy, the result is at least a temporary rise in incomes. However, those incomes do not rise equally. People who first receive the new credit—

who in most instances are those already at the top of the economic 

pyramid—receive the most benefit from the Fed’s inflationist polices. By the time those at the lower end of the income scale experience a nominal rise in incomes, they must also contend with price 

inflation that has eroded their standard of living. Except for the 

lucky few who take advantage of the new credit first, the negative 

effects of inflation likely more than outweigh any temporary gains 

in nominal income from the Federal Reserve’s expansionist polices. 

For evidence of who really benefits from a system of fiat money 

and inflation, consider that in 1971, before President Nixon severed 

the last link of the American currency to gold, the typical CEO’s 

salary was 30 times higher than the average wage of the typical 

employee; today it is 500 times higher. 

Explosions in CEO salaries can be a sign of a federal credit bubble, which occurs when Federal Reserve Board-created credit flows 

into certain sectors such as the stock market or the housing market. Far from being a sign of the health of capitalism, excessive 

CEO salaries in these areas often signal that a bubble is about to 

burst. When a bubble bursts, people at the bottom of the economic 

ladder bear the brunt of the bust. 

Instead of imposing new laws on private companies, Congress 

should repeal the laws that have weakened the ability of shareholders to discipline CEOs and boards of directors that do not run 

corporations according to the shareholders’ wishes. Congress should 

also examine how fiat money contributes to income inequality. I 

therefore request that my colleagues join me in opposing H.R. 1257 

and instead embrace a pro-freedom, pro-shareholder, and pro-worker agenda of free markets and sound money. 

RON PAUL. 

Æ 

mstockstill on PROD1PC66 with HEARING