79–008 

111TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 111–71 

PROVIDING FOR CONSIDERATION OF THE BILL (H.R. 1664) TO AMEND THE 

EXECUTIVE COMPENSATION PROVISIONS OF THE EMERGENCY ECONOMIC STABILIZATION ACT OF 2008 TO PROHIBIT UNREASONABLE AND 

EXCESSIVE COMPENSATION AND COMPENSATION NOT BASED ON PERFORMANCE STANDARDS 

MARCH 31, 2009.—Referred to the House Calendar and ordered to be printed 

Mr. PERLMUTTER, from the Committee on Rules, 

submitted the following 

R E P O R T 

[To accompany H. Res. 306] 

The Committee on Rules, having had under consideration House 

Resolution 306, by a nonrecord vote, report the same to the House 

with the recommendation that the resolution be adopted. 

SUMMARY OF PROVISIONS OF THE RESOLUTION

The resolution provides for consideration of H.R. 1664, to amend 

the executive compensation provisions of the Emergency Economic 

Stabilization Act of 2008 to prohibit unreasonable and excessive 

compensation and compensation not based on performance standards, under a structured rule. The rule provides one hour of general debate equally divided and controlled by the chair and ranking 

minority member of the Committee on Financial Services. The rule 

waives all points of order against consideration of the bill except 

clauses 9 and 10 of rule XXI. The rule provides that the amendment in the nature of a substitute recommended by the Committee 

on Financial Services now printed in the bill shall be considered as 

an original bill for the purpose of amendment and shall be considered as read. The rule waives all points of order against the 

amendment in the nature of a substitute except for clause 10 of 

rule XXI. This waiver does not affect the point of order available 

under clause 9 of rule XXI (regarding earmark disclosure). 

The rule makes in order only those amendments printed in this 

report. The amendments made in order may be offered only in the 

order printed in this report, may be offered only by a Member designated in this report, shall be considered as read, shall be debatable for the time specified in this report equally divided and controlled by the proponent and an opponent, shall not be subject to 

amendment, and shall not be subject to a demand for a division of 


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the question in the House or in the Committee of the Whole. All 

points of order against the amendments except for clauses 9 and 

10 of rule XXI are waived. The rule provides one motion to recommit with or without instructions. 

EXPLANATION OF WAIVERS

The waiver of all points of order against consideration of the bill 

(except for clauses 9 and 10 of rule XXI) includes a waiver of clause 

4(a) of rule XIII, requiring a three-day layover of the committee report. Although the rule waives all points of order against the 

amendment in the nature of a substitute (except clause 10 of rule 

XXI), the Committee is not aware of any points of order. The waiver of all points of order is prophylactic. 

SUMMARY OF AMENDMENTS TO BE MADE IN ORDER

(Summaries derived from information provided by sponsors) 

1. Frank (MA) Would provide further clarification that an institution does not become subject to the limitations on compensation 

in this bill as a result of doing business with an institution that 

has received a direct capital investment under either the TARP or 

HERA. Would exempt severance pay from coverage if the payment 

is made in the ordinary course to an employee who has been with 

the institution at least 5 years prior to dismissal, as long as that 

payment is not greater than the employee’s annual salary or 

$250,000. Would require the compensation data that an institution 

must report annually to the Treasury to include contributions 

made for the benefit of an employee’s immediate family members. 

Would create a Commission on Executive Compensation to study 

the executive compensation system for recipients of direct capital 

investments under the TARP and make recommendations for legislative and regulatory action. (20 minutes) 

2. Cardoza (CA) Would allow the Treasury Secretary to exempt 

financial institutions receiving TARP funds under a certain threshold. (10 minutes) 

3. Meeks, Gregory (NY) Would exempt from compensation standards any institutions that receive TARP funding or payment agreements entered into before the enactment of this bill. (10 minutes) 

4. Bean (IL)/McMahon (NY) Would allow institutions that enter 

into a payment schedule with Treasury on terms set by Treasury 

to no longer be subject to the bonus and compensation restrictions 

created by the Act. If an institution defaults on its payment schedule, any bonuses and compensation that exceeds the regulations 

promulgated in accordance to the Act would be subject to clawback. 

(10 minutes) 

5. Bilirakis (FL) Would clarify that an institution that is not a 

TARP recipient will not be subject to the requirements of the bill 

as a result of doing business with a TARP recipient. (10 minutes) 

6. DeFazio (OR) Would amend the Emergency Economic Stabilization Act of 2008 to make the shareholder vote on executive 

compensation packages binding upon the board of directors. (10 

minutes) 

7. Dahlkemper (PA) Would clarify the definition of executive 

compensation to include payments made before, during and after 

employment, and would make explicit that the definition of compensation considered under the standards to be prepared by the 


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Secretary to include payment of money, transfers of property or 

provision of services. (10 minutes) 

TEXT OF AMENDMENTS TO BE MADE IN ORDER

1. AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE FRANK OF

MASSACHUSETTS, OR HIS DESIGNEE, DEBATABLE FOR 20 MINUTES

In subsection (e)(1) of the matter proposed to be inserted by section 1(a) of the bill, in the matter following subparagraph (B), 

strike ‘‘nothing in this paragraph’’ and all that follows through 

‘‘under the TARP’’ and insert ‘‘an institution shall not become subject to the requirements of this paragraph as a result of doing business with a recipient of a direct capital investment under the 

TARP or under the amendments made by the Housing and Economic Recovery Act of 2008’’. 

In subsection (e) of the matter proposed to be inserted by section 

1(a) of the bill, redesignate paragraph (3) as paragraph (4) and insert after paragraph (2) the following: 

‘‘(3) CLARIFICATION RELATING TO SEVERANCE PAY.—For purposes of this subsection, a compensation payment or compensation payment arrangement shall not include a severance payment paid by an employer in the ordinary course of business 

to an employee who has been employed by the employer for a 

minimum of 5 years upon dismissal of that employee, unless 

such severance payment is in an amount greater than the annual salary of such employee or $250,000.’’. 

In the matter proposed to be inserted by section 1(a) of the bill, 

in subsection (e)(4)(B) (as redesignated by the previous amendment), insert before the period the following: ‘‘or for the benefit of 

that person’s immediate family members’’. 

At the end of the bill, insert the following new section: 

SEC. 2. EXECUTIVE COMPENSATION COMMISSION. 

Section 111 of the Emergency Economic Stabilization Act of 2008 

(12 U.S.C. 5221), as amended by section 1, is further amended by 

adding at the end the following new subsection: 

‘‘(j) EXECUTIVE COMPENSATION COMMISSION.— ‘‘(1) ESTABLISHMENT.—There is hereby established a commission to be known as the ‘Commission on Executive Compensation’ (hereinafter in this subsection referred to as the ‘Commission’). 

‘‘(2) DUTIES.— ‘‘(A) STUDY REQUIRED.—The Commission shall conduct a 

study of the executive compensation system for recipients 

of a direct capital investment under the TARP. In conducting such study, the Commission shall examine— 

‘‘(i) how closely executive pay is currently linked to 

company performance; 

‘‘(ii) how closely executive pay has been linked to 

company performance in the past; 

‘‘(iii) how executive pay can be more closely linked 

to company performance in the future; 

‘‘(iv) the factors influencing executive pay; and— 

‘‘(v) how current executive pay incentives affect executive behavior. 


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‘‘(B) CONSIDERATION OF PROPOSALS.—The Commission 

shall consider, in addition to any recommendations made 

by members of the Commission or outside advisers, the effects of implementing increased shareholder voice in executive compensation. 

‘‘(3) REPORT.— ‘‘(A) IN GENERAL.—Not later than 90 days after the date 

on which all members of the Commission have been appointed, the Commission shall deliver a report to the 

President and to the Congress containing— 

‘‘(i) recommendations for legislative action; 

‘‘(ii) recommendations for executive action, including 

actions taken by the Department of the Treasury or 

any other agency for which the Commission has recommendations; and 

‘‘(iii) recommendations for voluntary actions to be 

taken by recipients of a direct capital investment 

under the TARP. 

‘‘(B) MINORITY VIEWS.—The report required under subparagraph (A) shall be accompanied by any separate recommendations that members of the Commission wish to 

make, but that were not agreed upon by the Commission 

for purposes of the report required under subparagraph 

(A). Such separate recommendations must take the form of 

a proposal for aligning executive pay with the long-term 

health of the company. 

‘‘(4) COMPOSITION.— ‘‘(A) The Commission shall be composed of 9 members, 

appointed as follows: 

‘‘(i) 1 member appointed by the Council of Economic 

Advisers. 

‘‘(ii) 1 member appointed by the Speaker of the 

House of Representatives. 

‘‘(iii) 1 member appointed by the Senate Majority 

Leader. 

‘‘(iv) 1 member appointed by the House Minority 

Leader. 

‘‘(v) 1 member appointed by the Senate Minority 

Leader. 

‘‘(vi) 1 member appointed by the Chairman of the Financial Services Committee of the House of Representatives. 

‘‘(vii) 1 member appointed by the Ranking Member 

of the Financial Services Committee of the House of 

Representatives. 

‘‘(viii) 1 member appointed by the Chairman of the 

Banking, Housing, and Urban Affairs Committee of 

the Senate. 

‘‘(ix) 1 member appointed by the Ranking Member of 

the Banking, Housing, and Urban Affairs Committee 

of the Senate. 

‘‘(B) Each appointing entity shall name its member within 21 days of the date of the enactment of this subsection. 

‘‘(C) Any vacancy in the Commission shall be filled in 

the same manner as the original appointment. 


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‘‘(5) ACTIVITIES.— ‘‘(A) The Chairman of the Financial Services Committee 

of the House of Representatives shall select one member to 

serve as the Chairman of the Commission, and such Chairman will call to order the first meeting of the Commission 

within 10 business days after the date on which all members of the Commission have been appointed. 

‘‘(B) The Commission shall meet at least once every 30 

days and may meet more frequently at the discretion of 

the Chairman. 

‘‘(C) The Commission shall solicit and consider policy 

proposals from Members of Congress, the financial sector, 

academia and other fields as the Commission deems necessary. 

‘‘(D) The Commission shall hold at least two public hearings, and may hold more at the discretion of the Chairman. 

‘‘(6) ACTIONS BY THE COMMISSION.—A decision of a majority 

of commissioners present at a meeting of the Commission shall 

constitute the decision of the Commission where the Commission is given discretion to act, including but not limited to, recommendations to be made in the report described in paragraph 

3. 

‘‘(7) STAFF.—The Chair may hire at his or her discretion up 

to seven professional staff members. 

‘‘(8) TERMINATION.—The Commission shall terminate 30 days 

after the date on which the Commission submits its report to 

the President and the Congress under paragraph 3. 

‘‘(9) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated such sums as may be necessary to 

carry out this subsection. 

2. AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE CARDOZA

OF CALIFORNIA, OR HIS DESIGNEE, DEBATABLE FOR 10 MINUTES

In subsection (e) of the matter proposed to be inserted by section 

1(a), add at the end the following: 

‘‘(4) COMMUNITY FINANCIAL INSTITUTION EXEMPTION.— ‘‘(A) IN GENERAL.—The Secretary may exempt community financial institutions from any of the requirements of 

this subsection, when the Secretary finds that such an exemption is consistent with the purposes of this subsection. 

‘‘(B) COMMUNITY FINANCIAL INSTITUTION DEFINED.—for 

the purposes of this paragraph, the term ‘community financial institution’ means a financial institution that receives or received a direct capital investment under the 

Troubled Asset Relief Program under this title of not more 

than $250,000,000.’’. 

3. AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE MEEKS OF

NEW YORK, OR HIS DESIGNEE, DEBATABLE FOR 10 MINUTES

In subsection (e)(1) of the matter proposed to be inserted by section 1(a)— 


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(1) strike ‘‘has received or receives a direct capital investment under the Troubled Assets Relief Program under this 

title’’ and insert ‘‘receives a direct capital investment under the 

Troubled Assets Relief Program under this title after the date 

of enactment of this subsection’’; and 

(2) strike ‘‘any existing compensation arrangement’’ and insert ‘‘any compensation arrangement other than a compensation arrangement entered into prior to the date of enactment 

of this subsection’’. 

4. AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE BEAN OF

ILLINOIS, OR HER DESIGNEE, DEBATABLE FOR 10 MINUTES

In subsection (e) of the matter proposed to be inserted by section 

1(a) of the bill, redesignate paragraph (3) as paragraph (4) and insert after paragraph (2) the following: 

‘‘(3) CONDITIONAL EXEMPTION.— ‘‘(A) REPAYMENT AGREEMENT.—Paragraph (1) shall not 

apply to a financial institution that has entered into a 

comprehensive agreement with the Secretary to repay the 

United States, in accordance with a schedule and terms established by the Secretary, all outstanding amounts of any 

direct capital investment or investments received by such 

institution under this title. 

‘‘(B) DEFAULT.—If the Secretary determines that an institution that has entered into an agreement as provided 

for in subparagraph (A) has defaulted on such agreement, 

the Secretary shall require that any compensation payments made by such institution that would have been subject to paragraph (1) if the institution had not entered into 

such an agreement be surrendered to the Treasury.’’. 

5. AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE BILIRAKIS

OF FLORIDA, OR HIS DESIGNEE, DEBATABLE FOR 10 MINUTES

In subsection (e)(1) of the matter proposed to be inserted by section 1(a) of the bill, in the matter following subparagraph (B), 

strike ‘‘Provided that’’ and all that follows through ‘‘under the 

TARP’’ and insert ‘‘An institution shall not become subject to the 

requirements of this paragraph as a result of doing business with 

a recipient of a direct capital investment under the TARP or under 

the amendments made by the Housing and Economic Recovery Act 

of 2008’’. 

6. AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE DEFAZIO

OF OREGON, OR HIS DESIGNEE, DEBATABLE FOR 10 MINUTES

At the end of the bill insert the following: 

(c) SHAREHOLDER APPROVAL OF EXECUTIVE COMPENSATION.— Subsection (f)(2) of section 111 of the Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5221) is amended— 

(1) by striking ‘‘shall not be binding’’ and inserting ‘‘shall be 

binding’’; and 

(2) by striking ‘‘and may not be construed’’ and all that follows and inserting ‘‘and any compensation payment arrangeVerDate Nov 24 2008 05:11 Apr 01, 2009 Jkt 079008 PO 00000 Frm 00006 Fmt 6659 Sfmt 6602 E:\HR\OC\HR071.XXX HR071

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ment not approved by such a vote may not be entered into by 

the TARP recipient.’’. 

7. AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE

DAHLKEMPER OF PENNSYLVANIA, OR HER DESIGNEE, DEBATABLE

FOR 10 MINUTES

In subsection (e)(1)(B), of the matter proposed to be inserted by 

section 1(a), insert after ‘‘payment’’ the following: ‘‘, whether payable before employment, during employment, or after termination 

of employment,’’. 

In subsection (e), of the matter proposed to be inserted by section 

1(a), add at the end the following new paragraph: 

‘‘(4) COMPENSATION CONSIDERATIONS UNDER THE STANDARDS.—In establishing standards under this subsection, the 

Secretary shall consider as compensation any transfer of property, payment of money, or provision of services by the financial institution that causes any increase in wealth on the part 

of an executive or employee.’’. 

Æ 


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