II 

115TH CONGRESS 

1ST SESSION S. 1843 

To amend the Internal Revenue Code of 1986 to deny a deduction for 

excessive compensation of any employee of an employer, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 19, 2017 

Mrs. GILLIBRAND (for herself and Mr. DURBIN) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to deny a 

deduction for excessive compensation of any employee 

of an employer, and for other purposes. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Stop CEO Excessive 

5 Pay Act’’. 


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1 SEC. 2. DENIAL OF DEDUCTION FOR PAYMENTS OF EXCES2 SIVE COMPENSATION. 

3 (a) IN GENERAL.—Section 162 of the Internal Rev4 enue Code of 1986 is amended by inserting after sub5 section (h) the following new subsections: 

6 ‘‘(i) EXCESSIVE COMPENSATION.— 

7 ‘‘(1) IN GENERAL.—No deduction shall be al8 lowed under this chapter for any excessive com9 pensation for any employee of the taxpayer. 

10 ‘‘(2) EXCESSIVE COMPENSATION.—For pur11 poses of this subsection, the term ‘excessive com12 pensation’ means, with respect to any employee, the 

13 amount by which the compensation for services per14 formed by such employee during the taxable year ex15 ceeds the lesser of— 

16 ‘‘(A) the median of the compensation paid 

17 for services performed by all employees of the 

18 taxpayer during the taxable year, multiplied by 

19 25, or 

20 ‘‘(B) $1,000,000. 

21 ‘‘(3) OTHER DEFINITIONS AND SPECIAL

22 RULES.—For purposes of this subsection— 

23 ‘‘(A) COMPENSATION.—The term ‘com24 pensation’ includes wages, salary, fees, commis25 sions, fringe benefits, deferred compensation, 

26 retirement contributions, options, bonuses, 


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1 property, and any other form of remuneration 

2 that the Secretary determines is appropriate. 

3 ‘‘(B) EMPLOYER.—All persons treated as a 

4 single employer under subsection (a) or (b) of 

5 section 52 or subsection (m) or (o) of section 

6 414 shall be treated as a single taxpayer for 

7 purposes of this subsection. 

8 ‘‘(C) EMPLOYEE.—The term ‘employee’ in9 cludes full-time, part-time, and seasonal em10 ployees. 

11 ‘‘(4) REPORTING.—Each employer which pro12 vides any excessive compensation to any employee 

13 during a taxable year shall file a report with the 

14 Secretary with respect to such taxable year includ15 ing— 

16 ‘‘(A) the amount of compensation of the 

17 employee of the taxpayer receiving the lowest 

18 amount of compensation during such taxable 

19 year, 

20 ‘‘(B) the amount of compensation of the 

21 employee of the taxpayer receiving the highest 

22 amount of compensation during such taxable 

23 year, 


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1 ‘‘(C) the median compensation of all em2 ployees of the taxpayer during such taxable 

3 year, 

4 ‘‘(D) the number of employees of the tax5 payer who are receiving excessive compensation 

6 during such taxable year, and 

7 ‘‘(E) the amount of compensation of each 

8 employee described in subparagraph (D) during 

9 such taxable year. 

10 Such report shall be filed at such time and in such 

11 manner as the Secretary may require. 

12 ‘‘(j) FINES RELATING TO EXECUTIVE COMPENSA13 TION.—No deduction shall be allowed under this chapter 

14 for any fine paid to the Securities and Exchange Commis15 sion under section 16(h)(4) of the Securities Exchange 

16 Act of 1934.’’. 

17 (b) EFFECTIVE DATE.—The amendment made by 

18 this section shall apply to taxable years beginning after 

19 the date of the enactment of this Act. 

20 SEC. 3. AMENDMENT TO THE SECURITIES EXCHANGE ACT 

21 OF 1934. 

22 (a) IN GENERAL.—Section 16 of the Securities Ex23 change Act of 1934 (15 U.S.C. 78p) is amended by adding 

24 at the end the following: 


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1 ‘‘(h) SHAREHOLDER APPROVAL OF EXECUTIVE COM2 PENSATION.— 

3 ‘‘(1) CALCULATION OF COMPENSATION.—For 

4 purposes of this subsection, the term ‘compensation’ 

5 includes wages, salary, fees, commissions, fringe 

6 benefits, deferred compensation, retirement contribu7 tions, options, bonuses, property, and any other 

8 form of remuneration that the Commission, in con9 sultation with the Secretary of the Treasury, deter10 mines is appropriate. 

11 ‘‘(2) LIMITATION.— 

12 ‘‘(A) IN GENERAL.—Except as provided in 

13 subparagraph (B), the compensation paid to an 

14 employee of an issuer in any taxable year may 

15 not exceed the lesser of— 

16 ‘‘(i) $1,000,000; or 

17 ‘‘(ii) an amount that is 25 times the 

18 median amount of compensation paid to all 

19 employees of that issuer during that tax20 able year. 

21 ‘‘(B) EXCEPTION.—An issuer may pay 

22 compensation described in subparagraph (A) to 

23 an employee of the issuer if, not more than 18 

24 months before the last day of the taxable year 

25 in which the compensation is paid, not less than 


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1 50 percent of the shareholders of the issuer 

2 vote to approve the compensation through a 

3 proxy or consent or authorization for an annual 

4 or other meeting of the shareholders. 

5 ‘‘(3) PROXY CONTENTS.—Proxy materials for a 

6 shareholder vote described in paragraph (2)(B) shall 

7 include, with respect to the most recent taxable year 

8 ending before the date on which the vote takes 

9 place— 

10 ‘‘(A) the amount of compensation paid to 

11 the lowest paid employee of the issuer; 

12 ‘‘(B) the amount of compensation paid to 

13 the highest paid employee of the issuer; 

14 ‘‘(C) the median amount of compensation 

15 paid to all employees of the issuer; 

16 ‘‘(D) the number of employees of the 

17 issuer who are paid compensation in an amount 

18 that is more than 25 times the amount de19 scribed in subparagraph (C); and 

20 ‘‘(E) the total amount of compensation 

21 paid to the employees described in subpara22 graph (D). 

23 ‘‘(4) MONEY PENALTY.— 

24 ‘‘(A) IN GENERAL.—The Commission may 

25 impose a civil penalty against an issuer if— 


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1 ‘‘(i) the issuer, in a taxable year, pays 

2 compensation to an employee of the issuer 

3 in an amount that exceeds the lesser of— 

4 ‘‘(I) $1,000,000; or 

5 ‘‘(II) 25 times the median 

6 amount of compensation paid to all 

7 employees of that issuer during that 

8 taxable year; and 

9 ‘‘(ii)(I) the issuer does not conduct a 

10 vote described in paragraph (2)(B) with 

11 respect to the compensation described in 

12 clause (i); or 

13 ‘‘(II) less than 50 percent of the 

14 shareholders of the issuer vote to approve 

15 the compensation described in clause (i), in 

16 contravention of the requirement under 

17 paragraph (2)(B). 

18 ‘‘(B) AMOUNT OF PENALTY.—The amount 

19 of the penalty imposed under subparagraph (A) 

20 shall be equal to the excess of— 

21 ‘‘(i) the compensation described in 

22 subparagraph (A)(i); over 

23 ‘‘(ii) the lesser of— 

24 ‘‘(I) $1,000,000; or 


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1 ‘‘(II) the amount that is 25 times 

2 the median amount of compensation 

3 paid to all employees of the issuer 

4 during the taxable year in which that 

5 compensation is paid to that em6 ployee.’’. 

7 (b) DEADLINE FOR RULEMAKING.—Not later than 1 

8 year after the date of enactment of this Act, the Securities 

9 and Exchange Commission shall issue any final rules and 

10 regulations required to carry out section 16(h) of the Se11 curities Exchange Act of 1934, as added by subsection (a). 

Æ 


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