111TH CONGRESS 

1ST SESSION H. R. 1664 

AN ACT 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 
2 

•HR 1664 EH

1 SECTION 1. PROHIBITION ON CERTAIN COMPENSATION. 

2 (a) PROHIBITION ON CERTAIN COMPENSATION NOT

3 BASED ON PERFORMANCE STANDARDS.—Section 111 of 

4 the Emergency Economic Stabilization Act of 2008 (12 

5 U.S.C. 5221) is amended by redesignating subsections (e) 

6 through (h) as subsections (f) through (i), and inserting 

7 after subsection (d) the following: 

8 ‘‘(e) PROHIBITION ON CERTAIN COMPENSATION NOT

9 BASED ON PERFORMANCE STANDARDS.— 

10 ‘‘(1) PROHIBITION.—No financial institution 

11 that has received or receives a direct capital invest12 ment under the Troubled Assets Relief Program 

13 under this title, or with respect to the Federal Na14 tional Mortgage Association, the Federal Home 

15 Loan Mortgage Corporation, or a Federal home loan 

16 bank, under the amendments made by section 1117 

17 of the Housing and Economic Recovery Act of 2008, 

18 may, while that capital investment remains out19 standing, make a compensation payment, other than 

20 a longevity bonus or a payment in the form of re21 stricted stock, to any executive or employee under 

22 any existing compensation arrangement, or enter 

23 into a new compensation payment arrangement, if 

24 such compensation payment or compensation pay25 ment arrangement— 
3 

•HR 1664 EH

1 ‘‘(A) provides for compensation that is un2 reasonable or excessive, as defined in standards 

3 established by the Secretary, in consultation 

4 with the Chairperson of the Congressional 

5 Oversight Panel established under section 125, 

6 in accordance with paragraph (2); or 

7 ‘‘(B) includes any bonus or other supple8 mental payment, whether payable before em9 ployment, during employment, or after termi10 nation of employment, that is not directly based 

11 on performance-based measures set forth in 

12 standards established by the Secretary in ac13 cordance with paragraph (2). 

14 An institution shall not become subject to the re15 quirements of this paragraph as a result of doing 

16 business with a recipient of a direct capital invest17 ment under the TARP or under the amendments 

18 made by the Housing and Economic Recovery Act of 

19 2008. 

20 ‘‘(2) STANDARDS.—Not later than 30 days 

21 after the date of enactment of this subsection, the 

22 Secretary, with the approval of the agencies that are 

23 members of the Federal Financial Institutions Ex24 amination Council, and in consultation with the 

25 Chairperson of the Congressional Oversight Panel 
4 

•HR 1664 EH

1 established under section 125, shall establish the fol2 lowing: 

3 ‘‘(A) UNREASONABLE AND EXCESSIVE

4 COMPENSATION STANDARDS.—Standards that 

5 define ‘unreasonable or excessive’ for purposes 

6 of subparagraph (1)(A). 

7 ‘‘(B) PERFORMANCE-BASED STANDARDS.— 

8 Standards for performance-based measures that 

9 a financial institution must apply when deter10 mining whether it may provide a bonus or re11 tention payment under paragraph (1)(B). Such 

12 performance measures shall include— 

13 ‘‘(i) the stability of the financial insti14 tution and its ability to repay or begin re15 paying the United States for any capital 

16 investment received under this title; 

17 ‘‘(ii) the performance of the individual 

18 executive or employee to whom the pay19 ment relates; 

20 ‘‘(iii) adherence by executives and em21 ployees to appropriate risk management 

22 requirements; and 

23 ‘‘(iv) other standards which provide 

24 greater accountability to shareholders and 

25 taxpayers. 
5 

•HR 1664 EH

1 ‘‘(3) CLARIFICATION RELATING TO SEVERANCE

2 PAY.—For purposes of this subsection, a compensa3 tion payment or compensation payment arrangement 

4 shall not include a severance payment paid by an 

5 employer in the ordinary course of business to an 

6 employee who has been employed by the employer 

7 for a minimum of 5 years upon dismissal of that em8 ployee, unless such severance payment is in an 

9 amount greater than the annual salary of such em10 ployee or $250,000. 

11 ‘‘(4) CONDITIONAL EXEMPTION.— 

12 ‘‘(A) REPAYMENT AGREEMENT.—Para13 graph (1) shall not apply to a financial institu14 tion that has entered into a comprehensive 

15 agreement with the Secretary to repay the 

16 United States, in accordance with a schedule 

17 and terms established by the Secretary, all out18 standing amounts of any direct capital invest19 ment or investments received by such institu20 tion under this title. 

21 ‘‘(B) DEFAULT.—If the Secretary deter22 mines that an institution that has entered into 

23 an agreement as provided for in subparagraph 

24 (A) has defaulted on such agreement, the Sec25 retary shall require that any compensation pay-
6 

•HR 1664 EH

1 ments made by such institution that would have 

2 been subject to paragraph (1) if the institution 

3 had not entered into such an agreement be sur4 rendered to the Treasury. 

5 ‘‘(5) REPORTING REQUIREMENT.— 

6 ‘‘(A) IN GENERAL.—Any financial institu7 tion that is subject to the requirements of para8 graph (1) shall, not later than 90 days after the 

9 date of enactment of this subsection and annu10 ally on March 31 each year thereafter, transmit 

11 to the Secretary, who shall make a report which 

12 states how many persons (officers, directors, 

13 and employees) received or will receive total 

14 compensation in that fiscal year in each of the 

15 following amounts: 

16 ‘‘(i) over $500,000; 

17 ‘‘(ii) over $1,000,000; 

18 ‘‘(iii) over $2,000,000; 

19 ‘‘(iv) over $3,000,000; and 

20 ‘‘(v) over $5,000,000. 

21 The report shall distinguish amounts the insti22 tution considers to be a bonus and the reason 

23 for such distinction. The name or identity of 

24 persons receiving compensation in such 

25 amounts shall not be required in such reports. 
7 

•HR 1664 EH

1 The Secretary shall make such reports available 

2 on the Internet. Any financial institution sub3 ject to this paragraph shall issue a retrospective 

4 annual report for 2008 and both a prospective 

5 and retrospective annual report for each subse6 quent calendar year until such institution 

7 ceases to be subject to this paragraph. 

8 ‘‘(B) TOTAL COMPENSATION DEFINED.— 

9 For purposes of this paragraph, the term ‘total 

10 compensation’ includes all cash payments (in11 cluding without limitation salary, bonus, reten12 tion payments), all transfers of property, stock 

13 options, sales of stock, and all contributions by 

14 the company (or its affiliates) for that person’s 

15 benefit or for the benefit of that person’s imme16 diate family members. 

17 ‘‘(6) COMMUNITY FINANCIAL INSTITUTION EX18 EMPTION.— 

19 ‘‘(A) IN GENERAL.—The Secretary may 

20 exempt community financial institutions from 

21 any of the requirements of this subsection, 

22 when the Secretary finds that such an exemp23 tion is consistent with the purposes of this sub24 section. 
8 

•HR 1664 EH

1 ‘‘(B) COMMUNITY FINANCIAL INSTITUTION

2 DEFINED.—For the purposes of this paragraph, 

3 the term ‘community financial institution’ 

4 means a financial institution that receives or re5 ceived a direct capital investment under the 

6 Troubled Asset Relief Program under this title 

7 of not more than $250,000,000. 

8 ‘‘(7) COMPENSATION CONSIDERATIONS UNDER

9 THE STANDARDS.—In establishing standards under 

10 this subsection, the Secretary shall consider as com11 pensation any transfer of property, payment of 

12 money, or provision of services by the financial insti13 tution that causes any increase in wealth on the part 

14 of an executive or employee.’’. 

15 (b) REVISION TO RULE OF CONSTRUCTION.—Section 

16 111(b)(3)(D)(iii) of the Emergency Economic Stabiliza17 tion Act of 2008 (12 U.S.C. 5221(b)(3)(D)(iii)) is amend18 ed by inserting before the period the following: ‘‘, except 

19 that an entity subject to subsection (e) may not, while a 

20 capital investment described in that subsection remains 

21 outstanding, pay a bonus or other supplemental payment 

22 that is otherwise prohibited by clause (i) without regard 

23 to when the arrangement to pay such a bonus was entered 

24 into’’. 
9 

•HR 1664 EH

1 SEC. 2. EXECUTIVE COMPENSATION COMMISSION. 

2 Section 111 of the Emergency Economic Stabilization 

3 Act of 2008 (12 U.S.C. 5221), as amended by section 1, 

4 is further amended by adding at the end the following new 

5 subsection: 

6 ‘‘(j) EXECUTIVE COMPENSATION COMMISSION.— 

7 ‘‘(1) ESTABLISHMENT.—There is hereby estab8 lished a commission to be known as the ‘Commission 

9 on Executive Compensation’ (hereinafter in this sub10 section referred to as the ‘Commission’). 

11 ‘‘(2) DUTIES.— 

12 ‘‘(A) STUDY REQUIRED.—The Commission 

13 shall conduct a study of the executive com14 pensation system for recipients of a direct cap15 ital investment under the TARP. In conducting 

16 such study, the Commission shall examine— 

17 ‘‘(i) how closely executive pay is cur18 rently linked to company performance; 

19 ‘‘(ii) how closely executive pay has 

20 been linked to company performance in the 

21 past; 

22 ‘‘(iii) how executive pay can be more 

23 closely linked to company performance in 

24 the future; 

25 ‘‘(iv) the factors influencing executive 

26 pay; and 
10 

•HR 1664 EH

1 ‘‘(v) how current executive pay incen2 tives affect executive behavior. 

3 ‘‘(B) CONSIDERATION OF PROPOSALS.— 

4 The Commission shall consider, in addition to 

5 any recommendations made by members of the 

6 Commission or outside advisers, the effects of 

7 implementing increased shareholder voice in ex8 ecutive compensation. 

9 ‘‘(3) REPORT.— 

10 ‘‘(A) IN GENERAL.—Not later than 90 

11 days after the date on which all members of the 

12 Commission have been appointed, the Commis13 sion shall deliver a report to the President and 

14 to the Congress containing— 

15 ‘‘(i) recommendations for legislative 

16 action; 

17 ‘‘(ii) recommendations for executive 

18 action, including actions taken by the De19 partment of the Treasury or any other 

20 agency for which the Commission has rec21 ommendations; and 

22 ‘‘(iii) recommendations for voluntary 

23 actions to be taken by recipients of a direct 

24 capital investment under the TARP. 
11 

•HR 1664 EH

1 ‘‘(B) MINORITY VIEWS.—The report re2 quired under subparagraph (A) shall be accom3 panied by any separate recommendations that 

4 members of the Commission wish to make, but 

5 that were not agreed upon by the Commission 

6 for purposes of the report required under sub7 paragraph (A). Such separate recommendations 

8 must take the form of a proposal for aligning 

9 executive pay with the long-term health of the 

10 company. 

11 ‘‘(4) COMPOSITION.— 

12 ‘‘(A) The Commission shall be composed of 

13 9 members, appointed as follows: 

14 ‘‘(i) 1 member appointed by the Coun15 cil of Economic Advisers. 

16 ‘‘(ii) 1 member appointed by the 

17 Speaker of the House of Representatives. 

18 ‘‘(iii) 1 member appointed by the Sen19 ate Majority Leader. 

20 ‘‘(iv) 1 member appointed by the 

21 House Minority Leader. 

22 ‘‘(v) 1 member appointed by the Sen23 ate Minority Leader. 
12 

•HR 1664 EH

1 ‘‘(vi) 1 member appointed by the 

2 Chairman of the Financial Services Com3 mittee of the House of Representatives. 

4 ‘‘(vii) 1 member appointed by the 

5 Ranking Member of the Financial Services 

6 Committee of the House of Representa7 tives. 

8 ‘‘(viii) 1 member appointed by the 

9 Chairman of the Banking, Housing, and 

10 Urban Affairs Committee of the Senate. 

11 ‘‘(ix) 1 member appointed by the 

12 Ranking Member of the Banking, Housing, 

13 and Urban Affairs Committee of the Sen14 ate. 

15 ‘‘(B) Each appointing entity shall name its 

16 member within 21 days of the date of the en17 actment of this subsection. 

18 ‘‘(C) Any vacancy in the Commission shall 

19 be filled in the same manner as the original ap20 pointment. 

21 ‘‘(5) ACTIVITIES.— 

22 ‘‘(A) The Chairman of the Financial Serv23 ices Committee of the House of Representatives 

24 shall select one member to serve as the Chair25 man of the Commission, and such Chairman 
13 

•HR 1664 EH

1 will call to order the first meeting of the Com2 mission within 10 business days after the date 

3 on which all members of the Commission have 

4 been appointed. 

5 ‘‘(B) The Commission shall meet at least 

6 once every 30 days and may meet more fre7 quently at the discretion of the Chairman. 

8 ‘‘(C) The Commission shall solicit and con9 sider policy proposals from Members of Con10 gress, the financial sector, academia and other 

11 fields as the Commission deems necessary. 

12 ‘‘(D) The Commission shall hold at least 

13 two public hearings, and may hold more at the 

14 discretion of the Chairman. 

15 ‘‘(6) ACTIONS BY THE COMMISSION.—A deci16 sion of a majority of commissioners present at a 

17 meeting of the Commission shall constitute the deci18 sion of the Commission where the Commission is 

19 given discretion to act, including but not limited to, 

20 recommendations to be made in the report described 

21 in paragraph 3. 

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

23 discretion up to seven professional staff members. 

24 ‘‘(8) TERMINATION.—The Commission shall 

25 terminate 30 days after the date on which the Com-
14 

•HR 1664 EH

1 mission submits its report to the President and the 

2 Congress under paragraph 3. 

3 ‘‘(9) AUTHORIZATION OF APPROPRIATIONS.— 

4 There are authorized to be appropriated such sums 

5 as may be necessary to carry out this subsection.’’. 

Passed the House of Representatives April 1, 2009. 

Attest: 

Clerk. 

111TH CONGRESS 

1ST SESSION H. R. 1664 

AN ACT 

To amend the executive compensation provisions of 

formance standards. pensation and compensation not based on per2008 to prohibit unreasonable and excessive comthe Emergency Economic Stabilization Act of