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Speeches and Floor Statements

Scott Supports Shareholder Vote on CEO Compensation Packages

House Considers Measure Allowing Shareholders to Vote on Executive Pay

Washington, April 18, 2007 | Chandra Harris (770-210-5073)
Scott Supports Shareholder Vote on CEO Compensation Packages
Today Congressman David Scott (D-GA) spoke on the House Floor in support of H.R. 1257, which requires that public companies ensure shareholders have an annual nonbinding advisory vote on their company’s executive compensation plans. Congressman Scott delivered the following remarks:

Let me first start by commending our chairman for taking on this very important and timely issue. This is an issue that speaks to the issue of confidence in the American enterprise system. There is no more greater issue that we need to deal with, and I think what the major point that we need to emphasize here is that there is a problem, and obviously there is a terrific problem. There is a terrific problem on several layers.

Let me start with the first layer. First of all, we have a problem where we have a stretch of the differences between what the average worker is making in the American economy and this huge leap by multibillions of dollars by what CEOs are making. This is not an aberration. This is a fact in case after case.

Plus, on top of that, none of these performances for these huge CEO packages are done based upon performance. As a matter of fact, some of the most outrageous demonstrations of this have been corporate CEO packages that have rewarded companies with hundreds of millions of dollars in their packages for a lack of performance, even while their company has been going down, even while their company has been laying off people, even as they have turned their backs on their pension obligations to employees. No, this is not an aberration, and there is a hue and a cry from the American people across the American landscape that is saying something must be done.

Now, we are the people's representatives, and what the chairman has put forward, and I certainly appreciate the chairman for allowing me to have an opportunity to work with him on this, what we are putting forward here is basically a fair and moderate response, no overreaction.

We have taken the marketplace with its basic components. What is the most important attribute of our system? It is the free marketplace. And what is the most important part of that? It is the exchange of stock ownership. And who plays that most important role there? It is the investor. Once that investor begins to lose confidence, we are all in a world of trouble.

There is nothing in our bill that mandates a certain salary level, none of that. Our bill simply says: Let us let the system work. What is wrong with ending these egregious characteristics of what is happening in the marketplace as far as CEO packages is concerned? It begs for the shareholders who own the company to at least have a say, a nonbinding say.

We understand the fragility of what we are doing. We are doing this in a gingerly manner. But let me just state to you in closing that all of the studies, and there will be some amendments which will come forward, some wanting to study this issue, some saying let the SEC rules work out, but what the American people and what the investor and what the situation cries out for are two things: transparency and accountability.

That is the hallmark of what we are doing. We are bringing accountability, and we are bringing transparency to what is clearly, from all of the media accounts, from all of the evidence presented to us is clear, and it is dangerous, and it is present. What we have and what we are responding to is something that is clearly a clear and present danger to the future and the heart of our free economic system.