WASHINGTON -- Stockholders should be granted greater influence over the pay and benefits of their companies' executives, the chairman of a key Senate panel has told the Securities and Exchange Commission.
Sen. Christopher J. Dodd, D-Conn., chairman of the Banking Committee's securities subcommittee, said in a letter to SEC Chairman Richard C. Breeden that the SEC should not let management prevent shareholders from taking non-binding advisory votes on the level of compensation received by company executives.
Mr. Dodd, whose subcommittee has jurisdiction over securities law, noted that a bill by Sen. Carl Levin, D-Mich., would bar the
SEC from approving any proxy statement that denied the right of stockholders to voice -- through a non-binding vote -- their views on corporate pay policies.
Mr. Dodd also said the SEC "has clear authority" to act on its own to prevent corporate managements from prohibiting such votes.
"Indeed, Sen. Levin has pursued legislation because the commission has not exercised its authority to require inclusion of shareholder proposals relating to corporate pay policies in proxy statements," Mr. Dodd wrote.
Mr. Levin's legislation would not establish compensation "caps" on management, Mr. Dodd noted, but it would require more complete disclosure of executive salaries, stock options and other benefits.
Additional stockholder influence over corporate pay policies is justified by growing public and congressional concerns about laid-off employees bearing "the brunt of economic hard times," Mr. Dodd said.