We applaud the U.S. Securities and Exchange Commission and Chairman Mary L. Schapiro for proposing to give shareholders better information about the potential conflicts of interest of compensation consultants who help set pay for senior corporate executives. 

A Congressional report in December 2007 found that chief executive officers of companies which use compensation consultants with potential conflicts—providing management with other services—received considerably higher pay than CEOs of companies that used independent compensation consultants. Compensation consultants are supposed to provide the board unbiased advice on the CEO's pay.  Too often, the consulting firm pockets far more in fees for providing employee benefit services to the company's management.  Better disclosure is needed to bring these conflicts of interest out of the shadows.  

Outsized compensation packages for senior executives hurt shareholders including pension plans investing the retirement savings of America's working families.  Labor union members participate in pension plans with more than $4 trillion in assets.  Union-sponsored pension plans hold about $450 billion in assets.  Excessive pay packages for top executives are a giveaway of our members' money. 

We also welcome the decision by the SEC to require companies to disclose information about directors' skills and experience on issues ranging from pay to accounting.  This will enable shareholders to determine if existing directors aren't well qualified, especially as the SEC is already considering making it easier for large, long-term shareholders to field nominees when current directors aren't watching out for investors' best interests. 

We are heartened by the SEC vote to eliminate broker discretionary voting for directors when shareholders fail to give them directions on how to vote.  This rule is long overdue and will ensure that votes for shareholder proposals are not unfairly skewed in favor of management. Finally, we are pleased that the SEC is proposing giving shareholders an advisory vote on the pay of senior executives of companies that received taxpayer assistance, as required by the law.

The AFL-CIO is the country's largest labor federation and represents 11 million members.

Contact:  Vineeta Anand 202-637-5182; vanand@aflcio.org
                  Amaya Tune 202-637-5018; atune@aflcio.org