Proposed Law Empowers Shareholders

Many investors and a large part of the general public have expressed their outrage and disgust at the excessive compensation practices of several corporate executives essentially draining their companies dry. In response to this situation, Obama has proposed new legislation that would give shareholders larger control over pay practices, allowing them to limit these golden parachutes and other forms of reckless compensation.

Wall Street (Image:Flickr)

 
“This financial crisis had many significant causes, but executive compensation practices were a contributing factor,” according to Treasury Secretary Timothy Geithner in a statement he released today.
 
The say on pay law, as the concept is referred to in the business world, sits alongside other proposed laws that aim to increase corporate transparency, such as a law that would force corporate compensation committees to distance themselves from the company. According to Geithner, the federal government has been considering several different tactics to curb executive irresponsibility, which means that the say on pay law may be the tip of the iceberg.