Senator to introduce shareholder bill of rights
WASHINGTON (Reuters) - A U.S. bill giving shareholders more say on executive pay and an easier way to nominate corporate directors will be introduced in the Senate as early as Tuesday, a source familiar with the matter said on Friday.
Democratic Senator Charles Schumer plans on introducing a shareholder bill of rights amid investor anger over how financial services firms were managed.
"It has become apparent that one of the central causes of the financial and economic crises we face today is the widespread failure of corporate governance," Schumer, a key member of the Senate Banking Committee, said in a letter to fellow lawmakers.
Shareholders are clamoring for more influence and have demanded change from their companies after the government has had to use billions of dollars in taxpayer funds to rescue companies like insurer AIG and investment bank Bear Stearns.
Schumer's bill confirms the U.S. Securities and Exchange Commission's authority to grant shareholders access to the corporate proxy for nominations to the board of directors.
The SEC will consider proposals on Wednesday to make it easier and cheaper for shareholders to influence the composition of a corporate board.
The bill requires public companies to create a separate risk committee in order to ensure that risk management is given appropriate oversight. Companies would be required to separate the duties of the chief executive and board chairman -- such as what happened at Bank of America. In April, shareholders voted to strip Chief Executive Officer Kenneth Lewis of his position as chairman of the board.
Schumer's bill would require companies to obtain shareholder approval for executives' so-called golden parachutes, or the hefty pay packages given to executives when they leave the company.
It also requires corporate directors to be subject to annual shareholder votes and to receive a majority of votes cast by shareholders in order to remain on board.
"In too many instances, within too many of our most important businesses and financial institutions, both executive management and boards of directors failed in their most basic duties," Schumer said.
(Reporting by Rachelle Younglai; editing by Carol Bishopric)
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