Tell Your Senators to Support 'Say on Pay'

Frequently, the pay that corporate chief executives receive has little connection with the performance of the companies they lead. A case in point is the compensation packages of CEOs at many of the financial services companies that were most involved in the subprime mortgage market. Unfortunately, shareholders do not have a meaningful voice in the way boards of directors establish and approve executive pay and thus cannot ensure a link between CEO pay and corporate performance.

In order for shareholders to have a voice in the process, Congress needs to pass a "say on pay" law requiring publicly traded companies to submit executive pay plans to a nonbinding shareholder vote each year. Such an advisory vote would prompt corporate boards to engage shareholders in meaningful conversations about appropriate levels of executive pay before approving executive pay. In short, "say on pay" legislation would provide a cost-effective and efficient way to curb excessive executive pay and encourage long-term value creation at public companies.

Please send a message to your senators today and urge them to support giving shareholders a "say on pay."

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Subject:

Dear [ Decision Maker ],

(Edit Letter Below)

I am writing to urge you to support the Shareholder Vote on Executive Compensation Act (S. 1181), which Sen. Barack Obama introduced in May 2007.  The House has already passed a similar "say on pay" bill, H.R. 1257, by a very wide margin.  It is now critical that you work to pass this bill during this session of Congress.

This bill would give shareholders a voice in the executive compensation process, making boards of directors more accountable to the long-term interests of companies and their investors when setting CEO pay.  Requiring a shareholder vote on executive compensation will encourage boards to consider shareholder interests before approving executive pay.  Such consideration will result in pay packages that are better aligned with performance.

The importance of this bill has become even more evident over the past year as CEOs at companies that have been financially devastated by the subprime mortgage crisis have received lavish compensation packages despite their managerial failures.  I am sure you share my outrage at the excessive severance packages some CEOs have recently received even though they oversaw the destruction of billions of dollars in shareholder value.  A "say on pay" law would give shareholders the tools they need to make sure this does not continue to happen.

For too long, executive compensation has been out of control.  Please co-sponsor S. 1181 to require an advisory shareholder vote on CEO pay.

Sincerely,
[Your name]
[Your address]

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