WASHINGTON (Reuters) - Legislation to address "runaway" executive compensation was introduced on Thursday by a group of House Democrats who said companies should fully disclose what they pay their top management.
"We are not taking anybody's pay or even setting any limits," Rep. Barney Frank of Massachusetts, the ranking Democrat on the House Financial Services Committee, told a news conference.
Rather, he said, the legislation would require that publicly traded companies disclose in their annual reports and proxy statements all compensation paid to top executives -- including pensions, personal use of private jets, and other benefits that are often hidden.
Frank said the percentage of company profits that go to the top five executives at U.S. public companies had more than doubled from 1993 to 2003 -- from 4.8 percent to 10.3 percent.
This trend, he said, came at a time when many U.S. workers are losing basic benefits such as pensions.
The Securities and Exchange Commission has been expected to push for better disclosure of executive pay. If the SEC did so, the bill would be complimentary to the initiative, Frank said.
SEC Chairman Chris Cox told Reuters on Thursday that he planned to bring a first rule proposal before the commission early next year on the executive pay issue.
Frank's co-sponsors include California Rep. George Miller and Minnesota Rep. Martin Olav Sabo. Massachusetts' top financial regulator, William Galvin, joined them at the news conference to endorse the bill.
In addition to requiring that pay be disclosed, the bill would make public companies disclose compensation policies, including targets used to determine top executives' compensation.
The measure would also require that companies disclose a policy for recapturing compensation such as bonuses that subsequent financial results showed were unjustified.
Smaller public companies would get a break under the bill. "Top executives" would mean only the CEO for companies with less than $250 million in assets; the CEO and the next two highest paid executives for companies with more than $250 million but less than $500 million in assets, and the CEO and the next four highest paid officers for companies with over $500 million in assets.