Tell Your Senators to Support a 'Say on Pay'

Too often, executives' compensation packages have little to do with the performance of the companies they lead. And while new SEC disclosure rules require companies to provide shareholders with more detailed information about executive compensation, shareholders do not have a meaningful voice in the way boards of directors establish and approve executive pay.

Last year, Sen. Barack Obama (D-Ill.) introduced the Shareholder Vote on Executive Compensation Act (S. 1181) to require that public companies submit executive pay plans to a nonbinding shareholder vote each year. This advisory vote would give shareholders a "say on pay"--a voice in the process of determining executive compensation. This would give boards an incentive to engage shareholders in meaningful conversations about appropriate levels of executive compensation before approving a questionable compensation plan. S. 1181 would have provided 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. Obama introduced last year. This bill would give shareholders a voice in the executive compensation process, thereby 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 a questionable pay plan.  Such consideration will result in pay packages that are better aligned with performance.

I am outraged at the excessive severance packages some CEOs receive, despite poor performance.  For example, Pfizer's Hank McKinnell received an exit package worth approximately $200 million, even though Pfizer's share price dropped almost 40 percent during his tenure as CEO.  Home Depot's share price dropped 8 percent when Robert Nardelli was CEO.  He still received a $200 million exit package, including questionable stock options granted during the stock market decline following the terrorist attacks of Sept. 11, 2001.  Both are striking examples of pay for failure.

The SEC's new executive-compensation disclosure rules are an important first step to fix the CEO pay problem. These new rules, however, are meaningless without requiring an advisory shareholder vote on executive pay packages.

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

Sincerely,
[Your name]
[Your address]

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