IB 

Union Calendar No. 53 

110TH CONGRESS 

1ST SESSION H. R. 1257 

[Report No. 110–88] 

To amend the Securities Exchange Act of 1934 to provide shareholders 

with an advisory vote on executive compensation. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 1, 2007 

Mr. FRANK of Massachusetts (for himself, Mr. SCOTT of Georgia, Mr. RANGEL, Mr. GEORGE MILLER of California, Ms. VELA ́ZQUEZ, Mr. KANJORSKI, Mr. GUTIERREZ, Mr. DEFAZIO, Mr. CLAY, Mr. BACA, Mr. AL

GREEN of Texas, Mr. COOPER, Ms. WOOLSEY, Mr. SHERMAN, Mr. 

ELLISON, Mr. LANTOS, Mr. ACKERMAN, Mr. MILLER of North Carolina, 

Mr. CLEAVER, Mr. SIRES, Mr. PERLMUTTER, and Mr. WILSON of Ohio) 

introduced the following bill; which was referred to the Committee on Financial Services 

APRIL 16, 2007 

Additional sponsors: Ms. MOORE of Wisconsin, Mr. MEEKS of New York, Mr. 

LYNCH, Ms. CARSON, Mr. MARSHALL, and Mrs. MALONEY of New York 

APRIL 16, 2007 

Reported with an amendment, committed to the Committee of the Whole 

House on the State of the Union, and ordered to be printed 

[Strike out all after the enacting clause and insert the part printed in italic] 

A BILL 

To amend the Securities Exchange Act of 1934 to provide 

shareholders with an advisory vote on executive compensation. 


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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: 

11 ‘‘(h) ANNUAL SHAREHOLDER APPROVAL OF EXECU12 TIVE COMPENSATION.— 

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

14 authorization under this section shall permit a sepa15 rate shareholder vote to approve the compensation of 

16 executives as disclosed pursuant to the Commission’s 

17 compensation disclosure rules (which disclosure shall 

18 include the compensation discussion and analysis, 

19 the compensation tables, and any related material). 

20 The shareholder vote shall not be binding on the 

21 board of directors and shall not be construed as 

22 overruling a decision by such board. 

23 ‘‘(2) SHAREHOLDER APPROVAL OF GOLDEN

24 PARACHUTE COMPENSATION.— 


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•HR 1257 RH

1 ‘‘(A) DISCLOSURE.—In any proxy solicita2 tion material that concerns an acquisition, 

3 merger, consolidation, or proposed sale or other 

4 disposition of substantially all the assets of an 

5 issuer, the person making such solicitation shall 

6 disclose in the proxy solicitation material, in a 

7 clear and simple form in accordance with regu8 lations of the Commission, any agreements or 

9 understandings that such person has with any 

10 principal executive officers of such issuer (or of 

11 the acquiring issuer, if such issuer is not the 

12 acquiring issuer) concerning any type of com13 pensation (whether present, deferred, or contin14 gent) that are based on or otherwise relate to 

15 the acquisition, merger, consolidation, sale, or 

16 other disposition, and that have not been sub17 ject to a shareholder vote under paragraph (1). 

18 ‘‘(B) SHAREHOLDER APPROVAL.—The 

19 proxy solicitation material containing the disclo20 sure required by subparagraph (A) shall require 

21 a separate shareholder vote to approve such 

22 agreements or understandings. A vote by the 

23 shareholders shall not be binding on the board 

24 of directors and shall not be construed as over25 ruling a decision by such board.’’. 


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

2 year after the date of the enactment of this Act, the Secu3 rities and Exchange Commission shall issue any final rules 

4 and regulations required by the amendments made by sub5 section (a). 

6 SECTION 1. SHORT TITLE. 

7 This Act may be cited as the ‘‘Shareholder Vote on Ex8 ecutive Compensation Act’’. 

9 SEC. 2. SHAREHOLDER VOTE ON EXECUTIVE COMPENSA10 TION DISCLOSURES. 

11 (a) AMENDMENT.—Section 16 of the Securities Ex12 change Act of 1934 (15 U.S.C. 78n) is amended by adding 

13 at the end the following new subsection: 

14 ‘‘(h) ANNUAL SHAREHOLDER APPROVAL OF EXECU15 TIVE COMPENSATION.— 

16 ‘‘(1) IN GENERAL.—Any proxy or consent or au17 thorization for an annual or other meeting of the 

18 shareholders occurring on or after January 1, 2009, 

19 shall permit a separate shareholder vote to approve 

20 the compensation of executives as disclosed pursuant 

21 to the Commission’s compensation disclosure rules 

22 (which disclosure shall include the compensation dis23 cussion and analysis, the compensation tables, and 

24 any related material). The shareholder vote shall not 

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


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1 construed as overruling a decision by such board, nor 

2 to create or imply any additional fiduciary duty by 

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

4 or limit the ability of shareholders to make proposals 

5 for inclusion in such proxy materials related to execu6 tive compensation. 

7 ‘‘(2) SHAREHOLDER APPROVAL OF GOLDEN

8 PARACHUTE COMPENSATION.— 

9 ‘‘(A) DISCLOSURE.—In any proxy solicita10 tion material for an annual or other meeting of 

11 the shareholders occurring on or after January 1, 

12 2009, that concerns an acquisition, merger, con13 solidation, or proposed sale or other disposition 

14 of substantially all the assets of an issuer, the 

15 person making such solicitation shall disclose in 

16 the proxy solicitation material, in a clear and 

17 simple form in accordance with regulations of 

18 the Commission, any agreements or under19 standings that such person has with any prin20 cipal executive officers of such issuer (or of the 

21 acquiring issuer, if such issuer is not the acquir22 ing issuer) concerning any type of compensation 

23 (whether present, deferred, or contingent) that 

24 are based on or otherwise relate to the acquisi25 tion, merger, consolidation, sale, or other disposiVerDate Aug 31 2005 22:36 Apr 16, 2007 Jkt 059200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6203 E:\BILLS\H1257.RH H1257

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1 tion, and that have not been subject to a share2 holder vote under paragraph (1). 

3 ‘‘(B) SHAREHOLDER APPROVAL.—The 

4 proxy solicitation material containing the disclo5 sure required by subparagraph (A) shall require 

6 a separate shareholder vote to approve such 

7 agreements or understandings. A vote by the 

8 shareholders shall not be binding on the board of 

9 directors and shall not be construed as over10 ruling a decision by such board, nor to create or 

11 imply any additional fiduciary duty by such 

12 board, nor shall such vote be construed to restrict 

13 or limit the ability of shareholders to make pro14 posals for inclusion in such proxy materials re15 lated to executive compensation.’’. 

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

17 year after the date of the enactment of this Act, the Securi18 ties and Exchange Commission shall issue any final rules 

19 and regulations required by the amendments made by sub20 section (a). 


hsrobinson on PROD1PC76 with BILLS

hsrobinson on PROD1PC76 with BILLS
Union Calendar No. 53 

110TH CONGRESS 

1ST SESSION H. R. 1257 

[Report No. 110

–88] 

A BILL 

To amend the Securities Exchange Act of 1934 to 

ecutive compensation. provide shareholders with an advisory vote on exAPRIL 16, 2007 

Reported with an amendment, committed to the Comand ordered to be printed mittee of the Whole House on the State of the Union, 


hsrobinson on PROD1PC76 with BILLS