An up or down advisory proxy vote on executive compensation packages is "the logical next step" for corporations to empower shareholders, Christopher Cox, SEC chairman, said today at the Council of Institutional Investors conference in Washington.
Mr. Cox, responding to a question at a luncheon, said the current SEC proposal on executive pay disclosure "doesn't go so far as to mandate a particular vote. That is the logical next step." But he expressed uncertainly as to whether that should be accomplished through regulation or corporate policy. Mr. Cox said he doesn't know his fellow commissioners' views about an advisory vote on executive compensation plans.
Speaking together at a conference session earlier today, Richard G. Ketchum, chief regulatory officer of New York Stock Exchange, and Edward S. Knight, executive vice president and general counsel of Nasdaq, told conference attendees that their markets would be willing to consider a new listing standard that would require corporations to provide for the advisory shareholder vote on executive compensation packages.
Mr. Knight also said the 404 provision of the Sarbanes-Oxley corporate reform law — which requires corporations to audit compliance and control functions — should be eased for smaller companies. The provision, onerous and costly for many companies, "falls disproportionately on small companies," he explained. "The cost is significant." Since these smaller companies represent only 6% of the U.S. equity market capitalization, any relaxation would not affect a major segment of the market, he added.
Also at the conference, Bradley D. Belt, executive director of the PBGC, said flaws in ERISA and bankruptcy law, which make it too easy for companies to use bankruptcy to offload dump underfunded pension plans onto the PBGC, need to be corrected.
The CII conference got off to a somewhat hot start. A fire alarm about 12:20 a.m. EST today forced attendees staying at the conference venue, the L'Enfant Plaza hotel, to evacuate the building. Hotel guests spilled out into the plaza, some barely dressed and most without jackets in the chilly night air.
For Daniel Slack, executive director of the $14.4 billion Illinois State Universities Retirement System, Champaign, and William Atwood, executive director of the $11.4 billion Illinois State Board of Investment, Chicago, the hotel evacuation was their first.
George Philip, executive director of the $80 billion New York State Teachers Retirement System, Albany, said the experience wasn't new to him. "When you travel as much as I have … It has happened before."
The fire department didn't declare the premises safe to allow the guests to return to their rooms until about 1:10 a.m., but the conference session began on time at 8 a.m. Jack Ehnes, CEO of the $141.9 billion California State Teachers' Retirement System, Sacramento, began the conference by welcoming the 600 attendees — a record high — and joking about the evacuation: "We were looking for a new way to network. It was great to see you all dressed up in your pajamas."
Kevin Bailey, a hotel associate, said a water-main break in an office building connected to the hotel triggered the alarm.