Barney Frank Cites Citigroup Vote as a Win for Shareholder Democracy
Congressman Barney Frank, Ranking Member of the House Financial Services Committee, today released the following statement in response to reports that the shareholders of Citigroup have rejected the executive pay packages put forth by its board.
The vote by the shareholders of Citigroup to disapprove the pay package for its top executive is one more piece of evidence of the beneficial effect of the Wall Street Reform and Consumer Protection Act which Congress passed in 2010. The say-on-pay provision of that act – unanimously opposed by House Republicans – has been falsely characterized as an example of government intrusion. It is, as the Citigroup shareholders’ vote shows, exactly the opposite. It is an empowerment of those who own the corporations of America so that they can control the entities in which they own shares.
Public unhappiness at the clearly excessive compensation levels for top executives in the financial world is undeniable, and the contrast between large compensation packages and the record of many of these institutions is very troubling. Congress rejected the notion that the federal government should directly intervene by setting pay levels, but we did believe that it was important for shareholders to be able to voice their opinions. In fact, had corporate America been willing on its own truly to honor the principal of shareholder democracy, our legislation would not have been necessary. But we believe that it was necessary, and we think it is now clear that it is also beneficial.
The vote at Citigroup was important, not only given the significance of Citigroup as a leading financial institution, but also because I believe it will encourage shareholders throughout the financial sector to take their responsibilities seriously. And the result should be a reduction in the excessive levels of compensation to financial company executives that will leave them still extremely well compensated, but not as poster children for unfairness in our country.