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Calling itself more 'nuanced' on exec comp than Business Roundtable, lobbying organization readies for less friendly Congress, White House in '09
May 19, 2008 ET
A new business lobbying group has arisen to challenge the Business Roundtable’s pre-eminence in Washington on issues related to executive compensation. The group of 36 Fortune 500 companies, united under the banner of the Center on Executive Compensation, was formed with the expectation of a much more antagonistic White House and Congress in 2009.
The HR Policy Association, which represents Fortune 500 human resources directors, established the Center, which is trying to take a more “nuanced” approach than the Business Roundtable on say-on-pay and related issues in an attempt to meet labor unions and shareholder groups on some middle ground and forestall more radical anti-business actions in 2009. A very likely candidate for congressional passage next year is the Shareholder Vote on Executive Compensation Act, which the House passed in April 2007. But the bill, sponsored in the Senate by Barack Obama (D-Ill.), has gone nowhere in the upper chamber, in part because of a veto threat from President Bush. That threat will disappear in 2009 with Mr. Obama or Sen. John McCain (R-Ariz.), an outspoken critic of inflated corporate compensation, likely to be living at 1600 Pennsylvania Ave.
“If there is a president who is more amenable to some of these changes, there is a greater likelihood we will see at-tempts legislatively on these issues, and I think there is widespread anticipation of that,” Timothy Bartl, vice president and general counsel of the HR Policy Association, who helps manage the Center, told Financial Week last week.
Both the Center and the Business Roundtable oppose the Obama bill. But Mr. Bartl wants to enhance the means shareholders have to communicate with the board of directors. “On some things, we will be more nuanced than the Roundtable,” Mr. Bartl said. “We want to offer a reasoned perspective on executive compensation that is a counter-perspective to some of the approaches to compensation advocated by critics, and also to lend our voices to reform where necessary.”
Nell Minow, a leading voice for shareholders and editor and co-founder of the Corporate Library, said, “It sounds like the Center is trying to be more centrist. The BRT talks a good game, but its members are among the worst offenders.”
The Center seems to be taking a tougher position against cash severance pay, known as golden parachutes, than the Business Roundtable. Charles Tharp, executive vice president for policy at the Center, explained, “While new executives should receive a supplemental severance, as they do now, once they have participated in performance-based awards for a period, the supplemental severance should phase out.”
It remains to be seen, though, how effective the Center will be. Mr. Tharp, who will be the “public face” of the Center, according to Mr. Bartl, is a part-time employee and an academic who is an instructor at Cornell University’s School of Industrial and Labor Relations. He is the Center’s only employee at the moment. Damon Silvers, associate general counsel at the AFL-CIO and its main lobbyist on Capitol Hill, said in an interview he has never heard of Mr. Tharp. Mr. Bartl said no outside lobbyists will be hired.
“If the Center is going to try to put a happy face on something indefensible, business lobbies have been trying to do that for a decade, and it doesn’t work,” Mr. Silvers said. “But if they will be pursuing regulatory and tax regimes that lead to real improvement, in a way they find thoughtful, in ways that are not blunt instruments, they will find plenty of partners here for that conversation.”
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