What's Next from Washington?
from
September/October 2007
by Peter Galuszka
Last year’s Democratic conquest of Congress made Barney Frank (D-Massachusetts), a prominent and populist-minded liberal, chairman of the House Financial Services Committee. Frank, who co-sponsored the Shareholder Vote on Executive Compensation bill, spoke to
Corporate Board Member
’s Peter Galuszka. Excerpts:
Are you planning further legislation that would give shareholders the right to vote on things other than compensation, such as how to run the business?
No. The relationship between the board and the CEO is different from the relationship the board has with suppliers and workers and the government. There is an intimacy between the CEO and the board of directors. They have picked each other. They work much too closely together, which justifies shareholder input on compensation. I must say, I was struck by the Chamber of Commerce’s letter opposing the executive-compensation bill. It said there was no need for it because boards have gotten so much better at doing their jobs. Do you remember why? Sarbanes-Oxley.
Major issues confronting the SEC include shareholders’ rights and proxy access. What do you predict?
I think that you’re going to see more assertiveness in shareholder meetings. We need an improvement in proxy access, which is a very big issue and one we are going to assess. I’m hoping that the SEC will go forward with some better proxy-access rules that would include the right for shareholders to nominate alternative candidates for the board.
The SEC is said to be exploring arbitration as a way to resolve shareholder complaints. What do you think of that?
If it’s mandatory, I think that’s a terrible idea. It would be inherently unfair to individuals. You’d have one group of large corporate entities that are in ongoing relationships with the arbiters, versus individuals with a one-time relationship. But I think voluntary arbitration is a good idea.
