Congressman Barney Frank
Representing Massachusetts' 4th District

Frank Chairs Debate on Executive Compensation
Committee Members Vote on Bill That Will Go To House Floor
July 28, 2009

Congressman Barney Frank, Chairman of the House Financial Services Committee, today led debate on his bill to eliminate perverse incentives in CEO compensation packages.

The bill, the Corporate and Financial Institution Compensation Fairness Act of 2009 (HR 3269), would seek to prevent excessive risk-taking by executives, some of whom in recent years have been incentivized to seek short-term profits, often at significant long-term cost to shareholders. In the most egregious examples, this helped drive some of the nation's largest financial institutions to the edge of bankruptcy.

Contrary to assertions by some opponents of the bill, it does not set caps on executive pay, nor does it tell corporations how they should compensate executives. Rather, it gives shareholders a "say on pay" -- an annual non-binding vote on executive incentive packages and "golden parachutes."

In Britain, where such legislation already exists, "say on pay" has proven to increase transparency, to limit excessive compensation, and to better align the interests of executives with those of shareholders.

Today, members of the Committee on Financial Services will vote on amendments to the bill before it goes to the House floor.