Mary L. Schapiro has been in the job just a few months, but the Obama administration's new top securities regulator already is pursuing an aggressive agenda that blends souped-up enforcement with new rules designed to give investors more power and advisors more responsibility. Schapiro, who was chosen late last year to head the Securities and Exchange Commission, made several proposals earlier this month aimed at giving shareholders more say in how companies are run.
Her proxy-access proposal would give shareholders the right to nominate candidates to a company's board, a right long sought by activist shareholders. She is also supporting an NYSE proposal that would block brokers from secretly voting client shares.
Shapiro recently agreed to an online interview, in which she answered questions about these proposals and the recent clamor to restrict executive pay.
There are proposals in Congress and TARP that would restrict executive pay. Is that something that's coming for the market at large?
I am concerned that executive compensation has, for a number of years, become disconnected from actual long-term company performance.
I worry that the structure of compensation has driven executives to make decisions that have significantly increased company risk -- without a full understanding by either shareholders or boards of the impact of additional risk on the company's long-term financial condition.
While issues recently have been most pronounced in the financial services industry, they appear throughout the market.
At what point does pay go from being an inside-baseball corporate decision to becoming a wider shareholder concern?
We are way past that point.
Shareholders across America are concerned with large corporate bonuses in situations in which they, as the company's owners, have seen declining performance.
Many shareholders have asked Congress for the right to voice their concerns about compensation through an advisory "say on pay." Congress provided this right to shareholders in companies that received TARP funds, and I believe shareholders of all companies in the U.S. markets deserve this same right.
What is proxy access?
Proxy access refers to the right of shareholders to submit board-of-director candidates to the company and have those candidates included in the proxy materials that the company distributes.
Similar proposals have been launched in the past, but have always been shot down largely because of business opposition. Do you think it will be different this time?
I'm looking forward to a robust public debate of our proposal, once it is released. I don't want to prejudge how anyone will react to the proposal.
Many investors say they're disillusioned with the stock market, believing both Wall Street and Main Street to be corrupt. Is this a concern for the SEC?
The SEC is the only federal agency whose primary function is protecting investors' interests.
We take this charge seriously and are committed to restoring investors' confidence in the integrity and fundamental fairness of the U.S. markets.
By reinvigorating the SEC and enhancing our enforcement efforts, I believe we can help to restore investor confidence.
Already since I've been at the agency, we have streamlined our enforcement procedures for initiating investigations, begun the process of hiring new skill sets to keep pace with the financial products of the day, and created an active agenda to propose new rules that would fill the regulatory gaps that came to light as a result of the financial crisis.
Mary L. Schapiro is the 29th Chairman of the U.S. Securities and Exchange Commission
Chairman Schapiro was appointed by President Barack Obama on January 20, 2009, unanimously confirmed by the U.S. Senate, and sworn in on January 27, 2009. She is the first woman to serve as the agency’s permanent Chairman.
Chairman Schapiro’s priorities at the SEC include reinvigorating a financial regulatory system that must protect investors and vigorously enforce the rules; and working to deepen the SEC’s commitment to transparency, accountability, and disclosure while always keeping the needs and concerns of investors front and center.
Prior to becoming SEC Chairman, she was CEO of the Financial Industry Regulatory Authority (FINRA) — the largest non-governmental regulator for all securities firms doing business with the U.S. public.
Chairman Schapiro joined the organization in 1996 as President of NASD Regulation, and was named Vice Chairman in 2002.
In 2006, she was named NASD’s Chairman and CEO. The following year, she led the organization’s consolidation with NYSE Member Regulation to form FINRA.
Chairman Schapiro previously served as a Commissioner of the SEC from December 1988 to October 1994.
She was appointed by President Ronald Reagan, reappointed by President George H.W. Bush in 1989, and named Acting Chairman by President Bill Clinton in 1993.
She left the SEC when President Clinton appointed her Chairman of the Commodity Futures Trading Commission, where she served until 1996.
Chairman Schapiro is an active member of the International Organization of Securities Commissions (IOSCO). She was Chairman of the IOSCO SRO Consultative Committee from 2002 to 2006.
A 1977 graduate of Franklin and Marshall College in Lancaster, Pa., Chairman Schapiro earned a Juris Doctor degree (with honors) from George Washington University in 1980. Chairman Schapiro was named the Financial Women’s Association Public Sector Woman of the Year in 2000. She received a Visionary Award from the National Council on Economic Education (NCEE) in 2008, honoring her as a “champion of economic empowerment.”
Blame High Executive Pay on Corporate Boards
At a time when the average pay of the top five most highly compensated executives in a company is eating up about 9 percent of corporate profits, we asked shareholders what they thought of current pay practices. Their comments should serve as a wake-up call to laissez-faire corporate directors.
Kathy M. Kristof, author of "Taming the Tuition Tiger" and "Investing 101," welcomes your comments and suggestions but regrets that she cannot respond individually to letters or phone calls. E-mail her at email@example.com
(c) 2009 Tribune Media Services, Inc.
Why No One Can Guess When Main Street Recovery will Occur
Paul A. Samuelson
Federal Reserve Chairmen Ben Bernanke glimpses a possible recovery by year end. He is a cautious scholar, backed by the best forecasters in the world at the Federal Reserve Board.
I would be a rash fool to quarrel with this quasi-optimistic view that by year end some stability will occur. You and I should hope that there will indeed be a glimmer of light at the end of the tunnel ahead. But shift our vision now to the future. Even if the short run prospect for a 2009-2010 recovery turns out to be good, I must warn once again that the long-run outlook for the U.S. dollar is hazardous.
The Complex Case of Complexity
by Alvin and Heidi Toffler
In an important recent speech, months after the current financial crisis began, the chairman of the U.S. Federal Reserve Board, Ben Bernanke, placed partial blame for the catastrophe on "the sharp increase in the complexity of the financial products offered to consumers." Unfortunately, his description of the problem comes late and underestimates its importance. ...
Why are Bankers Still Being Treated as Beltway Royalty
by Arianna Huffington
President Obama said that he's been "sobered by the fact that change in Washington comes slow" and "humbled by the fact that the presidency is extraordinarily powerful, but we are just part of a much broader tapestry of American life and there are a lot of different power centers." Well, one of those different power centers -- the entrenched special interests that continue to call so many shots on Capitol Hill -- is the main reason change in D.C. comes so slow. But despite all that I know about the reform-killing power unleashed by the nexus of lobbying, campaign cash and legislation, I have been flabbergasted by the amount of behind-the-scenes influence recently being wielded by the banking lobby.
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