WASHINGTON (April 21, 2010) – Pennsylvania Securities Commissioner Steven Irwin today urged Congress to help restore investors’ confidence in the financial markets by addressing perceived failures of adequate corporate governance and executive compensation standards.
Testifying on behalf of the North American Securities Administrators Association (NASAA), Irwin, who also chairs NASAA’s Federal Legislation Committee, told the House Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises that restoring public confidence in financial institutions is “the single most important task that confronts legislators and securities regulators.”
As the regulators closest to investors, state securities regulators have witnessed firsthand the withdrawal of Main Street investors from the markets due to fear, distrust and anger. “The person in the street sees salaries of corporate decision makers constantly increasing to a level viewed as obscene, while at the same time the corporations being managed are decreasing in value, losing money, failing in competition and eliminating productive jobs,” Irwin said.
“We have to make clear that a position in management does not represent an entitlement to steal from the corporate owners, the shareholders,” Irwin said. “We must assure adequate incentive for creative management while at the same time tying that incentive to actual production of long-term value for shareholders, rather than manipulation to achieve short-term financial results.”
Irwin said increasing disclosure requirements to give shareholders access to full and accurate information is part of the solution. He pointed to NASAA’s 2007 resolution on executive compensation disclosures and the Securities and Exchange Commission’s recent amendments to proxy disclosure rules that require disclosure of risks arising from compensation policies.
In addition to expanding disclosure rules, Irwin advocated empowering shareholders by establishing legal mechanisms by which issues of executive compensation and other corporate governance matters can be raised and decided by those who have a real interest in the outcome.
The complete testimony is available here.
NASAA is the oldest international organization devoted to investor protection. Its membership consists of the securities administrators in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Canada and Mexico.
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