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Public Statements

Access to Capital for Job Creators Act

Floor Speech

Location: Washington, DC


Mr. MILLER of North Carolina. Mr. Speaker, this amendment will require a disclosure that if there are going to be unregulated solicitations, unregulated advertisements asking for investments in these companies, at the very least, the advertisement or the solicitations should reveal if they are to disclose if there is a compensation agreement with the executives or a golden parachute severance package and what those are so that investors won't find that they are buying into a company that, if it does make a profit, there are already contracts in place that will make sure all those profits go to the executives who are there and not to the investors.

We've heard all manner of glowing praise for the kinds of small businesses that might benefit from this bill. I think the gentleman from Illinois referred to these as gazelle companies.

Mr. Speaker, there has been a bad history of flim-flams that have taken investors' money. The reason that we have investor protections is not just because of the self-aggrandizing ambitions of regulators. It is because there has been a history of abuse, and that abuse discourages capital from coming. No one is going to want to invest when there have been well publicized examples of investors who put their money into unregulated companies like these, like what this bill would create and lost their entire investment because it all was grabbed by a handful of executives.

And these disclosures are even more important because these companies will not be subject to the say-on-pay rules under the financial reform legislation passed and signed into law just last year. And we've already seen from the experience on say-on-pay that there remain real abuses of executive compensation. Even though many companies have changed their practices and have made them more transparent because they are worried about putting their pay practices to a vote of the shareholders, they fear disapproval, and they've changed their practices.

But even with that, about 2 percent--which is actually a pretty big number--get turned down. And they all get turned down for pretty much the same reasons. There is no connection between pay and performance. There are poor pay practices, like long-term benefits without any kind of a performance measure. There are bonuses that were way too easy to achieve, that the bar was set very, very low. There are performance measures that make no sense or simply that there was poor disclosure of what the compensation was, or the compensation was simply too much for the size of the company and what others in the industry are paying.

These companies will not have say-on-pay. They will not get a chance to vote on executive compensation, and they might find that they have bought into a company that has pay practices already in place, executive compensation contracts, golden parachute contracts that really ensures that even if the company does prove to be profitable, they won't get the benefit of the profits. It will all go to the executives who are selling them investments, who are encouraging them to invest in those companies.

These are obviously very, very helpful disclosures. This is important information for investors, and honest small businesses should not hesitate in the least to provide it.


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