II 

Calendar No. 50 

111TH CONGRESS 

1ST SESSION H. R. 1664 

IN THE SENATE OF THE UNITED STATES 

APRIL 2, 2009 

Received 

APRIL 22, 2009 

Read the first time 

APRIL 23, 2009 

Read the second time and placed on the calendar 

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, 

3 SECTION 1. PROHIBITION ON CERTAIN COMPENSATION. 

4 (a) PROHIBITION ON CERTAIN COMPENSATION NOT

5 BASED ON PERFORMANCE STANDARDS.—Section 111 of 

6 the Emergency Economic Stabilization Act of 2008 (12 

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


wwoods2 on PRODPC68 with BILLS
2 

HR 1664 PCS 

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

2 after subsection (d) the following: 

3 ‘‘(e) PROHIBITION ON CERTAIN COMPENSATION NOT

4 BASED ON PERFORMANCE STANDARDS.— 

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

6 that has received or receives a direct capital invest7 ment under the Troubled Assets Relief Program 

8 under this title, or with respect to the Federal Na9 tional Mortgage Association, the Federal Home 

10 Loan Mortgage Corporation, or a Federal home loan 

11 bank, under the amendments made by section 1117 

12 of the Housing and Economic Recovery Act of 2008, 

13 may, while that capital investment remains out14 standing, make a compensation payment, other than 

15 a longevity bonus or a payment in the form of re16 stricted stock, to any executive or employee under 

17 any existing compensation arrangement, or enter 

18 into a new compensation payment arrangement, if 

19 such compensation payment or compensation pay20 ment arrangement— 

21 ‘‘(A) provides for compensation that is un22 reasonable or excessive, as defined in standards 

23 established by the Secretary, in consultation 

24 with the Chairperson of the Congressional 


wwoods2 on PRODPC68 with BILLS
3 

HR 1664 PCS 

1 Oversight Panel established under section 125, 

2 in accordance with paragraph (2); or 

3 ‘‘(B) includes any bonus or other supple4 mental payment, whether payable before em5 ployment, during employment, or after termi6 nation of employment, that is not directly based 

7 on performance-based measures set forth in 

8 standards established by the Secretary in ac9 cordance with paragraph (2). 

10 An institution shall not become subject to the re11 quirements of this paragraph as a result of doing 

12 business with a recipient of a direct capital invest13 ment under the TARP or under the amendments 

14 made by the Housing and Economic Recovery Act of 

15 2008. 

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

17 after the date of enactment of this subsection, the 

18 Secretary, with the approval of the agencies that are 

19 members of the Federal Financial Institutions Ex20 amination Council, and in consultation with the 

21 Chairperson of the Congressional Oversight Panel 

22 established under section 125, shall establish the fol23 lowing: 

24 ‘‘(A) UNREASONABLE AND EXCESSIVE

25 COMPENSATION STANDARDS.—Standards that 


wwoods2 on PRODPC68 with BILLS
4 

HR 1664 PCS 

1 define ‘unreasonable or excessive’ for purposes 

2 of subparagraph (1)(A). 

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

4 Standards for performance-based measures that 

5 a financial institution must apply when deter6 mining whether it may provide a bonus or re7 tention payment under paragraph (1)(B). Such 

8 performance measures shall include— 

9 ‘‘(i) the stability of the financial insti10 tution and its ability to repay or begin re11 paying the United States for any capital 

12 investment received under this title; 

13 ‘‘(ii) the performance of the individual 

14 executive or employee to whom the pay15 ment relates; 

16 ‘‘(iii) adherence by executives and em17 ployees to appropriate risk management 

18 requirements; and 

19 ‘‘(iv) other standards which provide 

20 greater accountability to shareholders and 

21 taxpayers. 

22 ‘‘(3) CLARIFICATION RELATING TO SEVERANCE

23 PAY.—For purposes of this subsection, a compensa24 tion payment or compensation payment arrangement 

25 shall not include a severance payment paid by an 


wwoods2 on PRODPC68 with BILLS
5 

HR 1664 PCS 

1 employer in the ordinary course of business to an 

2 employee who has been employed by the employer 

3 for a minimum of 5 years upon dismissal of that em4 ployee, unless such severance payment is in an 

5 amount greater than the annual salary of such em6 ployee or $250,000. 

7 ‘‘(4) CONDITIONAL EXEMPTION.— 

8 ‘‘(A) REPAYMENT AGREEMENT.—Para9 graph (1) shall not apply to a financial institu10 tion that has entered into a comprehensive 

11 agreement with the Secretary to repay the 

12 United States, in accordance with a schedule 

13 and terms established by the Secretary, all out14 standing amounts of any direct capital invest15 ment or investments received by such institu16 tion under this title. 

17 ‘‘(B) DEFAULT.—If the Secretary deter18 mines that an institution that has entered into 

19 an agreement as provided for in subparagraph 

20 (A) has defaulted on such agreement, the Sec21 retary shall require that any compensation pay22 ments made by such institution that would have 

23 been subject to paragraph (1) if the institution 

24 had not entered into such an agreement be sur25 rendered to the Treasury. 


wwoods2 on PRODPC68 with BILLS
6 

HR 1664 PCS 

1 ‘‘(5) REPORTING REQUIREMENT.— 

2 ‘‘(A) IN GENERAL.—Any financial institu3 tion that is subject to the requirements of para4 graph (1) shall, not later than 90 days after the 

5 date of enactment of this subsection and annu6 ally on March 31 each year thereafter, transmit 

7 to the Secretary, who shall make a report which 

8 states how many persons (officers, directors, 

9 and employees) received or will receive total 

10 compensation in that fiscal year in each of the 

11 following amounts: 

12 ‘‘(i) over $500,000; 

13 ‘‘(ii) over $1,000,000; 

14 ‘‘(iii) over $2,000,000; 

15 ‘‘(iv) over $3,000,000; and 

16 ‘‘(v) over $5,000,000. 

17 The report shall distinguish amounts the insti18 tution considers to be a bonus and the reason 

19 for such distinction. The name or identity of 

20 persons receiving compensation in such 

21 amounts shall not be required in such reports. 

22 The Secretary shall make such reports available 

23 on the Internet. Any financial institution sub24 ject to this paragraph shall issue a retrospective 

25 annual report for 2008 and both a prospective 


wwoods2 on PRODPC68 with BILLS
7 

HR 1664 PCS 

1 and retrospective annual report for each subse2 quent calendar year until such institution 

3 ceases to be subject to this paragraph. 

4 ‘‘(B) TOTAL COMPENSATION DEFINED.— 

5 For purposes of this paragraph, the term ‘total 

6 compensation’ includes all cash payments (in7 cluding without limitation salary, bonus, reten8 tion payments), all transfers of property, stock 

9 options, sales of stock, and all contributions by 

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

11 benefit or for the benefit of that person’s imme12 diate family members. 

13 ‘‘(6) COMMUNITY FINANCIAL INSTITUTION EX14 EMPTION.— 

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

16 exempt community financial institutions from 

17 any of the requirements of this subsection, 

18 when the Secretary finds that such an exemp19 tion is consistent with the purposes of this sub20 section. 

21 ‘‘(B) COMMUNITY FINANCIAL INSTITUTION

22 DEFINED.—For the purposes of this paragraph, 

23 the term ‘community financial institution’ 

24 means a financial institution that receives or re25 ceived a direct capital investment under the 


wwoods2 on PRODPC68 with BILLS
8 

HR 1664 PCS 

1 Troubled Asset Relief Program under this title 

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

3 ‘‘(7) COMPENSATION CONSIDERATIONS UNDER

4 THE STANDARDS.—In establishing standards under 

5 this subsection, the Secretary shall consider as com6 pensation any transfer of property, payment of 

7 money, or provision of services by the financial insti8 tution that causes any increase in wealth on the part 

9 of an executive or employee.’’. 

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

11 111(b)(3)(D)(iii) of the Emergency Economic Stabiliza12 tion Act of 2008 (12 U.S.C. 5221(b)(3)(D)(iii)) is amend13 ed by inserting before the period the following: ‘‘, except 

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

15 capital investment described in that subsection remains 

16 outstanding, pay a bonus or other supplemental payment 

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

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

19 into’’. 

20 SEC. 2. EXECUTIVE COMPENSATION COMMISSION. 

21 Section 111 of the Emergency Economic Stabilization 

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

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

24 subsection: 

25 ‘‘(j) EXECUTIVE COMPENSATION COMMISSION.— 


wwoods2 on PRODPC68 with BILLS
9 

HR 1664 PCS 

1 ‘‘(1) ESTABLISHMENT.—There is hereby estab2 lished a commission to be known as the ‘Commission 

3 on Executive Compensation’ (hereinafter in this sub4 section referred to as the ‘Commission’). 

5 ‘‘(2) DUTIES.— 

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

7 shall conduct a study of the executive com8 pensation system for recipients of a direct cap9 ital investment under the TARP. In conducting 

10 such study, the Commission shall examine— 

11 ‘‘(i) how closely executive pay is cur12 rently linked to company performance; 

13 ‘‘(ii) how closely executive pay has 

14 been linked to company performance in the 

15 past; 

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

17 closely linked to company performance in 

18 the future; 

19 ‘‘(iv) the factors influencing executive 

20 pay; and 

21 ‘‘(v) how current executive pay incen22 tives affect executive behavior. 

23 ‘‘(B) CONSIDERATION OF PROPOSALS.— 

24 The Commission shall consider, in addition to 

25 any recommendations made by members of the 


wwoods2 on PRODPC68 with BILLS
10 

HR 1664 PCS 

1 Commission or outside advisers, the effects of 

2 implementing increased shareholder voice in ex3 ecutive compensation. 

4 ‘‘(3) REPORT.— 

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

6 days after the date on which all members of the 

7 Commission have been appointed, the Commis8 sion shall deliver a report to the President and 

9 to the Congress containing— 

10 ‘‘(i) recommendations for legislative 

11 action; 

12 ‘‘(ii) recommendations for executive 

13 action, including actions taken by the De14 partment of the Treasury or any other 

15 agency for which the Commission has rec16 ommendations; and 

17 ‘‘(iii) recommendations for voluntary 

18 actions to be taken by recipients of a direct 

19 capital investment under the TARP. 

20 ‘‘(B) MINORITY VIEWS.—The report re21 quired under subparagraph (A) shall be accom22 panied by any separate recommendations that 

23 members of the Commission wish to make, but 

24 that were not agreed upon by the Commission 

25 for purposes of the report required under subVerDate Nov 24 2008 03:24 Apr 24, 2009 Jkt 079200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H1664.PCS H1664

wwoods2 on PRODPC68 with BILLS
11 

HR 1664 PCS 

1 paragraph (A). Such separate recommendations 

2 must take the form of a proposal for aligning 

3 executive pay with the long-term health of the 

4 company. 

5 ‘‘(4) COMPOSITION.— 

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

7 9 members, appointed as follows: 

8 ‘‘(i) 1 member appointed by the Coun9 cil of Economic Advisers. 

10 ‘‘(ii) 1 member appointed by the 

11 Speaker of the House of Representatives. 

12 ‘‘(iii) 1 member appointed by the Sen13 ate Majority Leader. 

14 ‘‘(iv) 1 member appointed by the 

15 House Minority Leader. 

16 ‘‘(v) 1 member appointed by the Sen17 ate Minority Leader. 

18 ‘‘(vi) 1 member appointed by the 

19 Chairman of the Financial Services Com20 mittee of the House of Representatives. 

21 ‘‘(vii) 1 member appointed by the 

22 Ranking Member of the Financial Services 

23 Committee of the House of Representa24 tives. 


wwoods2 on PRODPC68 with BILLS
12 

HR 1664 PCS 

1 ‘‘(viii) 1 member appointed by the 

2 Chairman of the Banking, Housing, and 

3 Urban Affairs Committee of the Senate. 

4 ‘‘(ix) 1 member appointed by the 

5 Ranking Member of the Banking, Housing, 

6 and Urban Affairs Committee of the Sen7 ate. 

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

9 member within 21 days of the date of the en10 actment of this subsection. 

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

12 be filled in the same manner as the original ap13 pointment. 

14 ‘‘(5) ACTIVITIES.— 

15 ‘‘(A) The Chairman of the Financial Serv16 ices Committee of the House of Representatives 

17 shall select one member to serve as the Chair18 man of the Commission, and such Chairman 

19 will call to order the first meeting of the Com20 mission within 10 business days after the date 

21 on which all members of the Commission have 

22 been appointed. 

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

24 once every 30 days and may meet more fre25 quently at the discretion of the Chairman. 


wwoods2 on PRODPC68 with BILLS
13 

HR 1664 PCS 

1 ‘‘(C) The Commission shall solicit and con2 sider policy proposals from Members of Con3 gress, the financial sector, academia and other 

4 fields as the Commission deems necessary. 

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

6 two public hearings, and may hold more at the 

7 discretion of the Chairman. 

8 ‘‘(6) ACTIONS BY THE COMMISSION.—A deci9 sion of a majority of commissioners present at a 

10 meeting of the Commission shall constitute the deci11 sion of the Commission where the Commission is 

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

13 recommendations to be made in the report described 

14 in paragraph 3. 

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

16 discretion up to seven professional staff members. 

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

18 terminate 30 days after the date on which the Com19 mission submits its report to the President and the 

20 Congress under paragraph 3. 

21 ‘‘(9) AUTHORIZATION OF APPROPRIATIONS.— 

22 There are authorized to be appropriated such sums 

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

Passed the House of Representatives April 1, 2009. 

Attest: LORRAINE C. MILLER, 

Clerk. 


wwoods2 on PRODPC68 with BILLS
Calendar No. 50 

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 

APRIL 23, 2009 

Read the second time and placed on the calendar 


wwoods2 on PRODPC68 with BILLS