II 

110TH CONGRESS 

1ST SESSION S. 1181 

To amend the Securities Exchange Act of 1934 to provide shareholders 

with an advisory vote on executive compensation. 

IN THE SENATE OF THE UNITED STATES 

APRIL 20, 2007 

Mr. OBAMA introduced the following bill; which was read twice and referred 

to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To amend the Securities Exchange Act of 1934 to provide 

shareholders with an advisory vote on executive compensation. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Shareholder Vote on 

5 Executive Compensation Act’’. 

6 SEC. 2. SHAREHOLDER VOTE ON EXECUTIVE COMPENSA7 TION DISCLOSURES. 

8 (a) AMENDMENT.—Section 16 of the Securities Ex9 change Act of 1934 (15 U.S.C. 78n) is amended by adding 

10 at the end the following new subsection: 


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1 ‘‘(h) ANNUAL SHAREHOLDER APPROVAL OF EXECU2 TIVE COMPENSATION.— 

3 ‘‘(1) IN GENERAL.—Any proxy or consent or 

4 authorization for an annual or other meeting of the 

5 shareholders occurring on or after January 1, 2009, 

6 shall permit a separate shareholder vote to approve 

7 the compensation of executives as disclosed pursuant 

8 to the Commission’s compensation disclosure rules 

9 (which disclosure shall include the compensation dis10 cussion and analysis, the compensation tables, and 

11 any related material). The shareholder vote shall not 

12 be binding on the board of directors and shall not 

13 be construed as overruling a decision by such board, 

14 nor to create or imply any additional fiduciary duty 

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

16 restrict or limit the ability of shareholders to make 

17 proposals for inclusion in such proxy materials re18 lated to executive compensation. 

19 ‘‘(2) SHAREHOLDER APPROVAL OF GOLDEN

20 PARACHUTE COMPENSATION.— 

21 ‘‘(A) DISCLOSURE.—In any proxy solicita22 tion material for an annual or other meeting of 

23 the shareholders occurring on or after January 

24 1, 2009, that concerns an acquisition, merger, 

25 consolidation, or proposed sale or other disposiVerDate Aug 31 2005 17:44 Apr 22, 2007 Jkt 059200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1181.IS S1181

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1 tion of substantially all the assets of an issuer, 

2 the person making such solicitation shall dis3 close in the proxy solicitation material, in a 

4 clear and simple form in accordance with regu5 lations of the Commission, any agreements or 

6 understandings that such person has with any 

7 principal executive officers of such issuer (or of 

8 the acquiring issuer, if such issuer is not the 

9 acquiring issuer) concerning any type of com10 pensation (whether present, deferred, or contin11 gent) that are based on or otherwise relate to 

12 the acquisition, merger, consolidation, sale, or 

13 other disposition, and that have not been sub14 ject to a shareholder vote under paragraph (1). 

15 ‘‘(B) SHAREHOLDER APPROVAL.—The 

16 proxy solicitation material containing the disclo17 sure required by subparagraph (A) shall require 

18 a separate shareholder vote to approve such 

19 agreements or understandings. A vote by the 

20 shareholders shall not be binding on the board 

21 of directors and shall not be construed as over22 ruling a decision by such board, nor to create 

23 or imply any additional fiduciary duty by such 

24 board, nor shall such vote be construed to re25 strict or limit the ability of shareholders to 


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1 make proposals for inclusion in such proxy ma2 terials related to executive compensation.’’. 

3 (b) DEADLINE FOR RULEMAKING.—Not later than 1 

4 year after the date of the enactment of this Act, the Secu5 rities and Exchange Commission shall issue any final rules 

6 and regulations required by the amendments made by sub7 section (a). 

Æ 


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