Congressman Keith Ellison (D-5th Congressional District) told a hearing of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises that the corporate governance reform bill that he introduced (H.R. 3272) would increase the ability of investors to weigh in on company decisions.
The bill recognizes that as the owners of companies, stockholders should have a greater say in company affairs. The bill is part of a broader legislative strategy to examine corporate structural relationships among shareholders, officers, and directors to generate improved profitability, manage executive compensation, and reduce risks to investors.
“Financial regulatory reform must include enhanced consumer protection measures and new regulation of financial instruments such as derivatives. But it also must address the potential causes of economic injustice at the root level by closely examining corporate structures,” Ellison said. “For far too long, our corporate governance system has failed to adequately protect shareholders. In the meantime unaccountable corporate officers and directors take excessive risks.”
“Executives should not be able to drive companies into the ground and walk away with millions. Shareholders, if given the opportunity to review executive compensation, would not allow this practice to continue,” Ellison said. In addition to requiring shareholder approval of executive compensation, Ellison’s proposal mandates creation of corporate risk management committees, and requires the chairman of the board to be independent and not serve as an executive officer.