Opponents of 'Shareholder Bill of Rights' Reach Out to Sen. Schumer
Thursday, April 30, 2009; 4:06 PM
Call it a case of preemptive lobbying: A group of corporate CEOs today launched an effort to personally appeal to Sen. Charles Schumer (D-N.Y.) to cancel introduction of a bill that would give shareholders a greater say in how executives are paid and appointed.
The Business Roundtable, which represents 160 CEOs from many of the nation's largest corporations, warned its members in an email this morning that a proposed "Shareholder Bill of Rights" would overturn "two hundred years of state corporate law" by "drastically altering board structure, governance and the role of shareholders," according to a copy obtained by The Washington Post.
Xerox CEO Anne Mulcahy, the author of the e-mail, urged other executives "to personally connect with Senator Schumer" and "urge him not to introduce this legislation." Mulcahy included a two-page list of "talking points" asserting that the bill would be "a very significant step toward federalizing corporate law."
The push comes amid increasing calls for tougher oversight on corporate executives embroiled in the economic meltdown and growing unhappiness among many shareholders. At a stormy annual meeting Wednesday, Bank of America replaced Kenneth D. Lewis as chairman after shareholders voted to separate the jobs of chairman and CEO, which is one of the reforms called for under Schumer's bill.
While business organizations, unions and other major lobbying groups often hope to head off or influence legislation before it is formally introduced, the Business Roundtable's last-minute effort to kill Schumer's proposal is more unusual in its late timing and personal focus on Schumer. The campaign also underscores the ferocity of behind-the-scenes debates over whether to increase government oversight of financial markets and corporate boardrooms.
As New York's senior senator, Schumer has often sided with Wall Street firms on financial and regulatory issues, but he has increasingly joined fellow Democrats in criticizing corporate executives for taking excessive bonuses and other conduct since the nation's prolonged economic collapse began last year.
Schumer's new bill would, among other things, require shareholder approval for "golden parachute" severance payments, would subject directors to annual votes from shareholders, and would give shareholders an advisory vote on executive compensation. The latter provision, known as "say-on-pay," is an idea that was supported by President Obama when he represented Illinois in the U.S. Senate.
A spokesman said Schumer had received a number of calls from CEOs so far, but said he has no intention of canceling plans to introduce his bill next week. Schumer began circulating a letter seeking support from other lawmakers for the measure earlier this month.
"He's being lobbied, but what he tells people is that the last few years have shown the need for greater corporate accountability," said Schumer spokesman Brian Fallon. "He believes giving shareholders greater say, and having independent chairmen at these companies, will provide that accountability."
The Business Roundtable--whose members include General Motors, Goldman Sachs and other major recipients of federal bailout money--views Schumer's proposals as a radical break from the traditional relationship between the private sector and the federal government. The group argues that most corporate governance issues are best left to state regulatory agencies, which have traditionally held sway on such matters.
Roundtable president John J. Castellani said the measures would unfairly punish thousands of publicly traded companies for the sins of a few, and would also increase the risk that small groups of shareholders could launch politically-motivated campaigns against some companies.
"While we understand the senator's concern about a few cases, we're hopeful that if he hears that these are not issues in the preponderance of corporations he might be persuaded not to introduce the legislation," Castellani said.