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For Immediate Release: April 21, 2005

Rep. Frank Welcomes Securities Regulators' Comments On Runaway Executive Compensation

WASHINGTON-Rep. Barney Frank (D-MA), Ranking Member of the House Financial Services Committee, stressed the importance of the agreement by top securities regulators that current trends in greatly increasing executive compensation are very troubling.

During today's Financial Services Committee hearing reviewing implementation of the Sarbanes-Oxley Act, Rep. Frank raised the issue of the economic impact of current levels of CEO and executive compensation granted by leading public companies in the United States. Executive compensation grew from approximately 4.8% of public company profits in 1993 to the point where compensation consumed more than 10% of these companies' profits in 2003. Executive compensation levels grew by an additional 25% in 2004. Meanwhile, the S&P 500 index and average workers' salaries are virtually stagnant.

Securities and Exchange Commission Chairman William H. Donaldson and Public Company Accounting Oversight Board Chairman William J. McDonough agreed that this issue should be pursued. They also agreed that the great increases in compensation appear unrelated to actual performance levels and that it is very difficult for shareholders or other individuals to calculate what exactly is being paid to executives.

"I'm glad that Chairman Donaldson and Chairman McDonough agree so strongly that the current trend in executive compensation granted by the nation's publicly traded companies is troublesome and deserves more attention," said Rep. Frank. "I agree that it would not be appropriate for Congress to set policy in this area, but I welcome any opportunity to work with securities regulators on this issue. I look forward to working with them to significantly improve clear public disclosure of these large amounts because transparency is the best way to deal with this problem."

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The Committee oversees all components of the nation's housing and financial services sectors including banking, insurance, real estate, public and assisted housing, and securities. The Committee continually reviews the laws and programs relating to the U.S. Department of Housing and Urban Development, the Federal Reserve Bank, the Federal Deposit Insurance Corporation, Fannie Mae and Freddie Mac, and international development and finance agencies such as the World Bank and the International Monetary Fund. The Committee also ensures enforcement of housing and consumer protection laws such as the U.S. Housing Act, the Truth In Lending Act, the Housing and Community Development Act, the Fair Credit Reporting Act, the Real Estate Settlement Procedures Act, the Community Reinvestment Act, and financial privacy laws.