HR 3269 RFS 
compensation consultant. This provision shall not be 
construed to require the compensation committee to 
implement or act consistently with the advice or rec-
ommendations of the compensation consultant, and 
shall not otherwise affect the compensation commit-
tee’s ability or obligation to exercise its own judg-
ment in fulfillment of its duties. 
‘‘(2) DISCLOSURE.—In any proxy or consent 
solicitation material for an annual meeting of the 
shareholders (or a special meeting in lieu of the an-
nual meeting) occurring on or after the date that is 
1 year after the date of enactment of the Corporate 
and Financial Institution Compensation Fairness 
Act of 2009, each issuer shall disclose in the proxy 
or consent material, in accordance with regulations 
to be promulgated by the Commission whether the 
compensation committee of the issuer retained and 
obtained the advice of a compensation consultant 
meeting the standards for independence promulgated 
pursuant to subsection (c). 
‘‘(3) REGULATIONS.—In promulgating regula-
tions under this subsection or any other provision of 
law with respect to compensation consultants, the 
Commission shall ensure that such regulations are 
competitively neutral among categories of consult-
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HR 3269 RFS 
ants and preserve the ability of compensation com-
mittees to retain the services of members of any 
such category. 
‘‘(e) AUTHORITY TO ENGAGE INDEPENDENT COUN-
SEL
AND OTHER ADVISORS.—The compensation com-
mittee of each issuer, in its capacity as a committee of 
the board of directors, shall have the authority, in its sole 
discretion, to retain and obtain the advice of independent 
counsel and other advisers meeting the standards for inde-
pendence promulgated pursuant to subsection (c), and the 
compensation committee shall be directly responsible for 
the appointment, compensation, and oversight of the work 
of such independent counsel and other advisers. This pro-
vision shall not be construed to require the compensation 
committee to implement or act consistently with the advice 
or recommendations of such independent counsel and 
other advisers, and shall not otherwise affect the com-
pensation committee’s ability or obligation to exercise its 
own judgment in fulfillment of its duties. 
‘‘(f) FUNDING.—Each issuer shall provide for appro-
priate funding, as determined by the compensation com-
mittee, in its capacity as a committee of the board of direc-
tors, for payment of compensation— 
‘‘(1) to any compensation consultant to the 
compensation committee that meets the standards 
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for independence promulgated pursuant to sub-
section (c), and 
‘‘(2) to any independent counsel or other ad-
viser to the compensation committee.’’. 
(b) STUDY AND REVIEW REQUIRED.— 
(1) IN
GENERAL.—The Securities and Ex-
change Commission shall conduct a study and review 
of the use of compensation consultants meeting the 
standards for independence promulgated pursuant to 
section 10B(c) of the Securities Exchange Act of 
1934 (as added by subsection (a)), and the effects 
of such use. 
(2) REPORT TO CONGRESS.—Not later than 2 
years after the rules required by the amendment 
made by this section take effect, the Commission 
shall submit a report to the Congress on the results 
of the study and review required by this paragraph. 
SEC. 4. ENHANCED COMPENSATION STRUCTURE REPORT-
ING TO REDUCE PERVERSE INCENTIVES. 
(a) ENHANCED DISCLOSURE
AND REPORTING
OF 
COMPENSATION ARRANGEMENTS.— 
(1) IN
GENERAL.—Not later than 9 months 
after the date of enactment of this Act, the appro-
priate Federal regulators jointly shall prescribe regu-
lations to require each covered financial institution 
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to disclose to the appropriate Federal regulator the 
structures of all incentive-based compensation ar-
rangements offered by such covered financial institu-
tions sufficient to determine whether the compensa-
tion structure— 
(A) is aligned with sound risk manage-
ment; 
(B) is structured to account for the time 
horizon of risks; and 
(C) meets such other criteria as the appro-
priate Federal regulators jointly may determine 
to be appropriate to reduce unreasonable incen-
tives offered by such institutions for employees 
to take undue risks that— 
(i) could threaten the safety and 
soundness of covered financial institutions; 
or 
(ii) could have serious adverse effects 
on economic conditions or financial sta-
bility. 
(2) RULES
OF
CONSTRUCTION.—Nothing in 
this subsection shall be construed as requiring the 
reporting of the actual compensation of particular 
individuals. Nothing in this subsection shall be con-
strued to require a covered financial institution that 
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does not have an incentive-based payment arrange-
ment to make the disclosures required under this 
subsection. 
(b) PROHIBITION ON CERTAIN COMPENSATION AR-
RANGEMENTS.—Not later than 9 months after the date 
of enactment of this Act, and taking into account the fac-
tors described in subparagraphs (A), (B), and (C) of sub-
section (a)(1), the appropriate Federal regulators shall 
jointly prescribe regulations that prohibit any incentive- 
based payment arrangement, or any feature of any such 
arrangement, that the regulators determine encourages in-
appropriate risks by covered financial institutions that— 
(1) could threaten the safety and soundness of 
covered financial institutions; or 
(2) could have serious adverse effects on eco-
nomic conditions or financial stability. 
(c) ENFORCEMENT.—The provisions of this section 
shall be enforced under section 505 of the Gramm-Leach- 
Bliley Act and, for purposes of such section, a violation 
of this section shall be treated as a violation of subtitle 
A of title V of such Act. 
(d) DEFINITIONS.—As used in this section— 
(1) the term ‘‘appropriate Federal regulator’’ 
means— 
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(A) the Board of Governors of the Federal 
Reserve System; 
(B) the Office of the Comptroller of the 
Currency; 
(C) the Board of Directors of the Federal 
Deposit Insurance Corporation; 
(D) the Director of the Office of Thrift 
Supervision; 
(E) the National Credit Union Administra-
tion Board; 
(F) the Securities and Exchange Commis-
sion; and 
(G) the Federal Housing Finance Agency; 
and 
(2) the term ‘‘covered financial institution’’ 
means— 
(A) a depository institution or depository 
institution holding company, as such terms are 
defined in section 3 of the Federal Deposit In-
surance Act (12 U.S.C. 1813); 
(B) a broker-dealer registered under sec-
tion 15 of the Securities Exchange Act of 1934 
(15 U.S.C. 78o); 
(C) a credit union, as described in section 
19(b)(1)(A)(iv) of the Federal Reserve Act; 
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(D) an investment advisor, as such term is 
defined in section 202(a)(11) of the Investment 
Advisers Act of 1940 (15 U.S.C. 80b–2(a)(11)); 
(E) the Federal National Mortgage Asso-
ciation; 
(F) the Federal Home Loan Mortgage 
Corporation; and 
(G) any other financial institution that the 
appropriate Federal regulators, jointly, by rule, 
determine should be treated as a covered finan-
cial institution for purposes of this section. 
(e) EXEMPTION FOR CERTAIN FINANCIAL INSTITU-
TIONS.—The requirements of this section shall not apply 
to covered financial institutions with assets of less than 
$1,000,000,000. 
(f) LIMITATION.—No regulation promulgated pursu-
ant to this section shall be allowed to require the recovery 
of incentive-based compensation under compensation ar-
rangements in effect on the date of enactment of this Act, 
provided such compensation agreements are for a period 
of no more than 24 months. Nothing in this Act shall pre-
vent or limit the recovery of incentive-based compensation 
under any other applicable law. 
(g) GAO STUDY.— 
(1) STUDY REQUIRED.— 
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(A) IN GENERAL.—The Comptroller Gen-
eral of the United States shall carry out a 
study to determine whether there is a correla-
tion between compensation structures and ex-
cessive risk taking. 
(B) FACTORS TO CONSIDER.—In carrying 
out the study required under subparagraph (A), 
the Comptroller General shall— 
(i) consider compensation structures 
used by companies from 2000 to 2008; and 
(ii) compare companies that failed, or 
nearly failed but for government assist-
ance, to companies that remained viable 
throughout the housing and credit market 
crisis of 2007 and 2008, including the 
compensation practices of all such compa-
nies. 
(C) 
DETERMINING
COMPANIES
THAT 
FAILED OR NEARLY FAILED.—In determining 
whether a company failed, or nearly failed but 
for government assistance, for purposes of sub-
paragraph (B)(ii), the Comptroller General 
shall focus on— 
(i) companies that received excep-
tional assistance under the Troubled Asset 
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Relief Program under title I of the Emer-
gency Economic Stabilization Act of 2009 
(12 U.S.C. 5211 et seq.) or other forms of 
significant government assistance, includ-
ing under the Automotive Industry Financ-
ing Program, the Targeted Investment 
Program, the Asset Guarantee Program, 
and the Systemically Significant Failing 
Institutions Program; 
(ii) the Federal National Mortgage 
Association; 
(iii) the Federal Home Loan Mort-
gage Corporation; and 
(iv) companies that participated in the 
Security and Exchange Commission’s Con-
solidated Supervised Entities Program as 
of January 2008. 
(2) REPORT.—Not later than the end of the 1- 
year period beginning on the date of the enactment 
of this Act, the Comptroller General shall issue a re- 
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port to the Congress containing the results of the 
study required under paragraph (1). 
Passed the House of Representatives July 31, 2009. 
Attest: 
LORRAINE C. MILLER, 
Clerk. 
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