The AFL-CIO today applauded rules proposed by the Securities and Exchange Commission (SEC) to give shareholders better information about the potential conflicts of interest of compensation consultants who help set pay for senior corporate executives.
A December 2007 congressional report found that CEOs of companies that use compensation consultants who have potential conflicts, such as providing management with other services, received considerably higher pay than CEOs of companies that used independent compensation consultants.
In a statement, AFL-CIO President John Sweeney said “better disclosure is needed to bring these conflicts of interest out of the shadows.”
Outsized compensation packages for senior executives hurt shareholders, including pension plans investing the retirement savings of America’s working families. Labor union members participate in pension plans with more than $4 trillion in assets. Union-sponsored pension plans hold about $450 billion in assets. Excessive pay packages for top executives are a giveaway of our members’ money.
The proposed rules, developed under the leadership of SEC Chairwoman Mary Shapiro, will be open for comment for as long as 60 days.
CEOs of Standard & Poor’s 500 companies were paid an average of $10.4 million in 2008. To learn more about excessive executive pay, visit our Executive PayWatch website.
Sweeney also voiced support for the SEC’s decision to require companies to disclose information about directors’ skills and experience on issues ranging from pay to accounting, so shareholders can make better choices among nominees for company boards of directors.
The SEC also has moved to eliminate broker discretionary voting for directors when shareholders fail to give them directions on how to vote. Sweeney said the AFL-CIO is “heartened” by the decision.
This rule is long overdue and will ensure that votes for shareholder proposals are not unfairly skewed in favor of management.
Finally, we are pleased that the SEC is proposing giving shareholders an advisory vote on the pay of senior executives of companies that received taxpayer assistance, as required by the law.
Read Sweeney’s statement here.