Letter Opposing H.R. 1257, the "Shareholder Vote on Executive Compensation Act"

March 27, 2007

The Honorable Barney Frank
Chairman
Committee on Financial Services
United States House of Representatives
Washington, DC 20515

The Honorable Spencer Bachus
Ranking Member
Committee on Financial Services
United States House of Representatives
Washington, DC 20515

Dear Chairman Frank and Ranking Member Bachus:

The U.S. Chamber of Commerce, the world's largest business federation representing more than three million businesses and organizations of every size, sector, and region, is committed to supporting good and responsible capital market regulation, including efforts to strengthen board compensation committees and to provide disclosure of clearer information about executive compensation.

Fundamentally, the Chamber believes that well-functioning independent compensation committees, along with clear and fair disclosure, represent the best means to determine executive compensation. The amount and terms of employment and executive compensation agreements result from a complex interaction of interests. The negotiations of these interests can produce highly complex arrangements that reflect varying interests of the parties. Ultimately, corporate boards want to retain executives who will perform at a high level and produce value for shareholders and jobs for workers.

The Chamber respectfully submits that allowing shareholders—rather than the board—an advisory "say on pay" will not produce the intended result. Shareholder votes are more likely to reflect their views on past stock or management performance rather than real insight into how to structure future compensation to ensure it drives future results. Further, the Chamber is concerned that this would result in yet another forum for "special interest politics." For these reasons, the Chamber opposes H.R. 1257, the "Shareholder Vote on Executive Compensation Act."

Sarbanes-Oxley has yielded significantly stronger and more independent boards and compensations committees. The Securities Exchange Commission has taken important steps recently to expand transparency and disclosure of executive compensation, and we believe that these steps need to be given adequate time to have an impact. The Chamber looks forward to working with Congress and the SEC to ensure that the combination of these steps is producing effective governance for shareholders and workers.

Sincerely,
R. Bruce Josten