Timothy Geithner, U.S. Secretary of Treasury, said the Obama Administration is proposing a new legislation called ‘say on pay.’ As the name implies, this proposal would give shareholders more voice on executive compensation, which will be authorized by the Securities and Exchange Commission (SEC).

“This financial crisis had many significant causes, but executive compensation practices were a contributing factor,” Geithner said in a statement.

Of course, there were criticisms, such as beliefs that the administration was interfering in the affairs of private firms. Geithner has tried his best to silence those complaints. He said,

“I want to be clear on what we are not doing. We are not capping pay,” he said. “We are not setting forth precise prescriptions for how companies should set compensation, which can often be counterproductive.”

Instead, shareholders would receive a nonbinding voice on executive pay and corporate compensation committees will be independent from company management. The nonbinding shareholder vote will include compensation on not just salary, but also on bonuses and stock awards for the top 5 executives at public companies.

However, if this legislation is approved by Congress, it would not just affect banks and other financial firms, but also all public companies. The Obama administration is doing what they can to better mange excessive executive compensation to prevent risk of jeopardizing the economy.