Media Clips

TheDeal.com

April 15, 2008

McCain thumbs-up on ‘say on pay’
By Ron Orol
Presidential hopeful and presumptive Republican candidate John McCain lashed out on Monday, April 14, at investment bank executives and came out in support of legislation entitling shareholders to a nonbinding vote on a CEO's pay package, also known as "say on pay."
The senator from Arizona, who spoke to media owners and journalists at the Newspaper Association of America's annual convention focused some of his remarks on a decision made by Goldman Sachs Group Inc.'s chief executive, Lloyd Blankfein, to oppose a say-on-pay shareholder proposal.
"Goldman Sachs' CEO decided not to support a say-on-pay provision," McCain told the NAA group at morning session at the Washington convention center. "Why shouldn't shareholders have that right. There has to be some modification of the behavior of some of these individuals. And they say, 'Well, let the stockholders do it,' and then one of the major investment houses in America just said, 'Well, no, we won't have the stockholders issue a nonbinding resolution.' So there's going to have to be, frankly, a lot more accountability."
McCain's support for say on pay increases the likelihood that whichever presidential candidate wins the White House, the measure will be approved. Say-on-pay legislation was approved by the House last year after being introduced by Financial Services Committee Chairman Barney Frank, D-Mass. Also, last summer, Democratic presidential hopeful Illinois Sen. Barack Obama introduced a companion measure in the Senate that is pending. New York Sen. Hillary Clinton, who is also seeking the Democratic nomination, has made noises about CEO pay, didn't co-sponsor that legislation.
Blankfein on Thursday said say on pay would restrict the board and make it difficult for the securities firm to attract and retain the best talent. The Goldman Sachs say-on-pay proposal was introduced by Walden Asset Management's Timothy Smith. Roughly 43% of participating shareholders supported the Walden Asset Management proposal.
Institutional investors and many corporate governance experts have been supporting so-called advisory say-on-pay measures, which have been introduced by shareholders of several corporations.
McCain also lashed out at Alan Schwartz, the CEO of Bear Stearns Cos. "And I think that there's plenty of that blame to go around, including very greedy people that happen to be in Wall Street today who, like the CEO of Bear Stearns who decided the day before he was bailed out by the federal government to cash in millions of dollars worth of stock," McCain added.
Obama, who spoke to the NAA at a luncheon session, complained that McCain is too soft when it comes to CEO compensation. "He's promising to make permanent the Bush tax cuts for the wealthiest few who didn't need them and didn't ask for them, tax breaks that are so irresponsible that John McCain himself once said they offended his conscience," Obama said. Clinton is scheduled to speak to NAA Tuesday.
Corporate governance expert Ira Millstein, a senior associate dean for corporate governance at Yale School of Management and a partner at Weil, Gotshal & Manges LLP, said in February that corporate executives need to improve communications with investors or the next administration, be it Republican or Democrat, will usher in stringent pro-shareholder legislation targeting executive compensation. He said the next administration would likely approve this measure and possibly other provisions boards and executives would be unhappy with. Another such provision is "shareholder access," which would give long-term institutional investors additional influence in corporate director elections.