The shareholder campaign for advisory votes on executive pay received another boost last week when the Council of Institutional Investors (CII) endorsed the idea.

The council, which represents 130 institutional investors with $3 trillion under management, approved the policy change at its spring meeting in Washington on March 20. The policy calls for annual advisory votes on compensation but leaves the details up to companies and investors to work out.

"The issue has a head of steam behind it, which will only increase during proxy season," Amy Borrus, deputy director of CII, told Governance Weekly.

Also last week, the House Committee on Financial Services held two days of hearings on H.R. 1257, a bill sponsored by Rep. Barney Frank (D-Mass.) that would provide for annual advisory votes on compensation and a separate vote on change-in-control payments. The committee was scheduled to vote on the bill on March 22, but the panel postponed the vote to March 28. Committee approval is expected as Frank's fellow Democrats hold a narrow majority on the panel. Frank said he expects the full House will approve the bill after Congress returns from its Easter recess in April, Congressional Quarterly reported.

Likewise, Richard Ferlauto, director of pension benefit policy at the American Federation of State, County, and Municipal Employees, which supports the legislation, told Reuters that he expects the House will approve the measure with some bipartisan support. However, "[the bill's] prospects in the Senate are uncertain. Then you have the prospect of a possible Bush administration veto," Ferlauto said.

Meanwhile, shareholders have filed more than 60 so-called "say on pay" resolutions this season that seek an annual advisory vote on the compensation received by senior executives. Investors in the United Kingdom, Sweden, Australia, and the Netherlands already have the right to vote each year on executive pay reports. The issue, which averaged 40 percent support at seven U.S. firms in 2006, will first appear on the ballot this season at Morgan Stanley on April 10 and at United Technologies on the 11th. One firm, Aflac, has agreed to hold an advisory vote starting in 2009.

The issue appears to be gaining support from large investors. In early March, the California State Teachers' Retirement System, one of the largest state pension funds, sent a letter to Frank that endorses his bill. The pension fund notes that the legislation would negate the need for investors to "[submit] resolutions to one company at a time" and would provide the same rights to all shareholders.

Frank also spoke about his bill at CII's meeting, where he said the measure "won't cost anyone a nickel" and questioned why anyone would oppose it. "Essentially, the argument against this is that shareholders aren't smart enough," Frank said on March 19, noting that the bill's critics generally have faith in the ability of the market to value companies.