A senior Democrat congressman is calling for U.S. shareholders to be given a greater say over executive pay and compensation.
The demand by Massachusetts Representative Barney Frank came as Congress's Financial Services Committee began hearings into the issue – a hot topic at the moment in the wake of last week's Enron verdicts.
Former Enron bosses Ken Lay and Jeffrey Skilling were both found guilty of fraud, conspiracy and other charges, and could now face the rest of their lives in prison.
"There have clearly been abuses," said Frank at the start of the hearing, at which there was heated debate between Republicans and Democrats over the morality of "the morality of lavish compensation", according to the Associated Press, reporting on the hearing.
Thomas Lehner, director of public policy for the Business Roundtable, a group representing chief executives of major companies, strongly rejected Frank's idea.
"If we adopted a system where small groups of activist shareholders used the process to politicise corporate decision making, the consequences could very well be destabilising," he warned.
"We should not ruin our free-market system because of a few rogues. We strongly believe that the current system has worked well and should not be changed," he added.
Lehner's view was echoed by several Republican members of the committee.
"Marie Antoinette would be embarrassed," said Nell Minow, of Corporate Library, a business governance group, referring to the chasm between executive and employee pay.
According to AP, the number of public companies ensnared in a federal investigation into the timing of stock option grants to their executives continues to grow.
More than a dozen companies have received inquiries from federal prosecutors in New York and the Securities and Exchange Commission seeking details on how they grant stock options.
The companies – the biggest of which so far is UnitedHealth Group Inc – are being examined to determine whether they boosted executives' payoffs from stock options by backdating the grants to coincide with a point where corresponding stock prices had dropped to lows.
Representatives reserved their greatest scorn, said AP, for Lee Raymond, the recently retired chairman of Exxon Mobil Corp., who received a package of nearly $400m, including salary, bonus, stock options and a one-year $1 million consulting deal.
"We've got a problem here," said representative David Scott, noting that Raymond's compensation worked out as more than $144,000 a day, while angry consumers paid more than $3 a gallon for gasoline.
It was important "for the sanctity of the markets" for companies to disclose executives' pay, Scott said.
The Securities & Exchange Commission proposed in January the biggest changes since 1992 in rules governing disclosure of executive compensation.
The changes would require companies to disclose far more details about their executives' pay packages and perks.
But Congressman Frank has insisted the SEC plan does not go far enough.
His proposed legislation would call for disclosure of more information on executive pay packages.
It would also require shareholder approval of executive compensation plans.
The bill's legislative prospects, however, are in doubt because it has drawn most of its support from minority Democrats, said AP.