Washington - Responding to the causes of the economic recession and the return of Wall Street mega-bonuses, U.S. Senator Robert Menendez (D-NJ), a member of the Banking Committee, today unveiled a legislative package that could bring accountability to corporate governance. The Corporate Executive Accountability Act would:

• hold executives accountable for risky management,
• give shareholders a greater say over executive compensation, and
• tie executive compensation to the long-term health of a company

"What everyone has learned all too painfully over the past year and a half is that risky behavior, excesses, and a lack of accountability on Wall Street can end up squeezing families on Main Street," said Menendez. "We can't afford to have short memories and allow the type of reckless corporate practices that got us into this economic mess in the first place to take root all over again. Corporate executives must be held accountable, and that is the purpose of this legislation."

Bill summary:

THE CORPORATE EXECUTIVE ACCOUNTABILITY ACT OF 2010
SPONSORED BY SENATOR ROBERT MENENDEZ

The Corporate Executive Accountability Act of 2010 would protect Main Street families by 1) giving shareholders a vote on executive pay; 2) ensuring that bad executives are held accountable for their performance and its effects on Main Street; and 3) providing incentives for executives to look out for the long-term viability of the corporation, not just short-term profits and bonuses. A summary of these provisions is below:


Give Shareholders a Vote on Executive Pay
• Provide shareholders a non-binding vote on whether a company's proposed executive pay should be approved
• Requires companies to disclose the ratio of CEO pay to median company worker pay in their annual report
Hold Executives Accountable for Failure or Fraud
• Provide regulators and investors authority to take back bonuses from corporate executives who engage in misconduct.
• Prohibit executives from receiving a "golden parachute" or other generous severance package when they are fired for cause.

Structure Executive Pay to Encourage Long-Term Viability of the Company, Not Just Short-Term Profits and Bonuses• Prevent publicly-listed company executives from cashing out all their vested equity compensation (stock options, shares, etc.) at once. Instead executives would only be allowed to cash out up to 20 percent of their vested equity compensation per year over a five-year period.
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