Rep Frank: CEO pay vote bill by mid-'07

WASHINGTON (Reuters) - Massachusetts Democratic Rep. Barney Frank said on Thursday he hopes to pass a bill by mid-2007 to give shareholders more say in setting corporate executive pay, a contentious topic for U.S. businesses.

U.S. Rep. Barney Frank (D-MA), House Financial Services Committee Chairman, answers questions for reporters during the Reuters Regulation Summit in Washington, January 11, 2007. REUTERS/Jonathan Ernst (UNITED STATES)

“We need to find some way to legislate greater shareholder involvement in setting CEO salaries,” Frank said at the annual Reuters Regulation Summit in Washington.

“We should legislate a requirement that in some way, shareholders have the ability to get to vote on that,” said Frank, the new House Financial Services Committee chairman.

“I hope we will pass a bill by the summer,” he said.

Frank's remarks came after news last week that retailer Home Depot Inc. HD.N Chairman Robert Nardelli's January 3 resignation came with a $210 million severance package, the latest in a series of huge paydays for top executives quitting under a cloud.

“The shareholders own the company. If the shareholders want to pay Nardelli that kind of money ... then they have a right to do that,” Frank said.

But the lawmaker noted that in most cases U.S. shareholders do not have a direct say in setting executive pay, a matter largely left up to boards of directors.

He said directors are doing a better job lately. “But what remains is they are not going to be a check on the CEO ... They pick each other. They are too close. So we need to enhance the shareholders,” he said.

“What we’re talking about is voting on everything -- the retirement, the initial pay package if they want to,” he said. “I want to include that if they want to, they can vote on whether or not there is some kind of a claw-back provision.”

A claw-back rule might let a company retrieve pay from an executive under certain circumstances.

“We would not mandate any particular proposal,” Frank stressed. “But we would mandate that the stockholders be able to vote on it.”