111TH CONGRESS 
1ST SESSION H. R. 3269 
AN ACT 
To amend the Securities Exchange Act of 1934 to provide 
shareholders with an advisory vote on executive com-
pensation and to prevent perverse incentives in the com-
pensation practices of financial institutions. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Corporate and Finan-
cial Institution Compensation Fairness Act of 2009’’. 
SEC. 2. SHAREHOLDER VOTE ON EXECUTIVE COMPENSA-
TION DISCLOSURES. 
Section 14 of the Securities Exchange Act of 1934 
(15 U.S.C. 78n) is amended by adding at the end the fol-
lowing new subsection: 
‘‘(i) ANNUAL SHAREHOLDER APPROVAL OF EXECU-
TIVE COMPENSATION.— 
‘‘(1) ANNUAL VOTE.—Any proxy or consent or 
authorization (the solicitation of which is subject to 
the rules of the Commission pursuant to subsection 
(a)) for an annual meeting of the shareholders to 
elect directors (or a special meeting in lieu of such 
meeting) where proxies are solicited in respect of 
any security registered under section 12 occurring 
on or after the date that is 6 months after the date 
on which final rules are issued under paragraph (4), 
shall provide for a separate shareholder vote to ap-
prove the compensation of executives as disclosed 
pursuant to the Commission’s compensation disclo-
sure rules for named executive officers (which disclo-
sure shall include the compensation committee re-
port, the compensation discussion and analysis, the 
compensation tables, and any related materials, to
the extent required by such rules). The shareholder 
vote shall not be binding on the issuer or the board 
of directors and shall not be construed as overruling 
a decision by such board, nor to create or imply any 
additional fiduciary duty by such board, nor shall 
such vote be construed to restrict or limit the ability 
of shareholders to make proposals for inclusion in 
such proxy materials related to executive compensa-
tion. 
‘‘(2) SHAREHOLDER
APPROVAL
OF
GOLDEN 
PARACHUTE COMPENSATION.— 
‘‘(A) DISCLOSURE.—In any proxy or con-
sent solicitation material (the solicitation of 
which is subject to the rules of the Commission 
pursuant to subsection (a)) for a meeting of the 
shareholders occurring on or after the date that 
is 6 months after the date on which final rules 
are issued under paragraph (4), at which share-
holders are asked to approve an acquisition, 
merger, consolidation, or proposed sale or other 
disposition of all or substantially all the assets 
of an issuer, the person making such solicita-
tion shall disclose in the proxy or consent solici-
tation material, in a clear and simple form in 
accordance with regulations to be promulgated
by the Commission, any agreements or under-
standings that such person has with any named 
executive officers of such issuer (or of the ac-
quiring issuer, if such issuer is not the acquir-
ing issuer) concerning any type of compensation 
(whether present, deferred, or contingent) that 
is based on or otherwise relates to the acquisi-
tion, merger, consolidation, sale, or other dis-
position of all or substantially all of the assets 
of the issuer and the aggregate total of all such 
compensation that may (and the conditions 
upon which it may) be paid or become payable 
to or on behalf of such executive officer. 
‘‘(B) 
SHAREHOLDER
APPROVAL.—Any 
proxy or consent or authorization relating to 
the proxy or consent solicitation material con-
taining the disclosure required by subparagraph 
(A) shall provide for a separate shareholder 
vote to approve such agreements or under-
standings and compensation as disclosed, unless 
such agreements or understandings have been 
subject to a shareholder vote under paragraph 
(1). A vote by the shareholders shall not be 
binding on the issuer or the board of directors 
of the issuer or the person making the solicita-
tion and shall not be construed as overruling a 
decision by any such person or issuer, nor to 
create or imply any additional fiduciary duty by 
any such person or issuer. 
‘‘(3) DISCLOSURE
OF
VOTES.—Every institu-
tional investment manager subject to section 13(f) 
shall report at least annually how it voted on any 
shareholder vote pursuant to paragraphs (1) or (2) 
of this section, unless such vote is otherwise required 
to be reported publicly by rule or regulation of the 
Commission. 
‘‘(4) RULEMAKING.—Not later than 6 months 
after the date of the enactment of the Corporate and 
Financial Institution Compensation Fairness Act of 
2009, the Commission shall issue final rules to im-
plement this subsection. 
‘‘(5) EXEMPTION
AUTHORITY.—The Commis-
sion may exempt certain categories of issuers from 
the requirements of this subsection, where appro-
priate in view of the purpose of this subsection. In 
determining appropriate exemptions, the Commis-
sion shall take into account, among other consider-
ations, the potential impact on smaller reporting 
issuers.’’.
SEC. 3. COMPENSATION COMMITTEE INDEPENDENCE. 
(a) STANDARDS RELATING TO COMPENSATION COM-
MITTEES.—The Securities Exchange Act of 1934 (15 
U.S.C. 78a et seq.) is amended by inserting after section 
10A the following new section: 
‘‘SEC. 10B. STANDARDS RELATING TO COMPENSATION COM-
MITTEES. 
‘‘(a) COMMISSION RULES.— 
‘‘(1) IN GENERAL.—Effective not later than 9 
months after the date of enactment of the Corporate 
and Financial Institution Compensation Fairness 
Act of 2009, the Commission shall, by rule, direct 
the national securities exchanges and national secu-
rities associations to prohibit the listing of any class 
of equity security of an issuer that is not in compli-
ance with the requirements of any portion of sub-
sections (b) through (f). 
‘‘(2) OPPORTUNITY TO CURE DEFECTS.—The 
rules of the Commission under paragraph (1) shall 
provide for appropriate procedures for an issuer to 
have an opportunity to cure any defects that would 
be the basis for a prohibition under paragraph (1) 
before the imposition of such prohibition. 
‘‘(3) EXEMPTION
AUTHORITY.—The Commis-
sion may exempt certain categories of issuers from 
the requirements of subsections (b) through (f),
where appropriate in view of the purpose of this sec-
tion. In determining appropriate exemptions, the 
Commission shall take into account, among other 
considerations, the potential impact on smaller re-
porting issuers. 
‘‘(b) INDEPENDENCE OF COMPENSATION COMMIT-
TEES.— 
‘‘(1) IN GENERAL.—Each member of the com-
pensation committee of the board of directors of the 
issuer shall be independent. 
‘‘(2) CRITERIA.—In order to be considered to 
be independent for purposes of this subsection, a 
member of a compensation committee of an issuer 
may not, other than in his or her capacity as a 
member of the compensation committee, the board 
of directors, or any other board committee accept 
any consulting, advisory, or other compensatory fee 
from the issuer. 
‘‘(3) EXEMPTION
AUTHORITY.—The Commis-
sion may exempt from the requirements of para-
graph (2) a particular relationship with respect to 
compensation committee members, where appro-
priate in view of the purpose of this section. 
‘‘(4) DEFINITION.—As used in this section, the 
term ‘compensation committee’ means—
‘‘(A) a committee (or equivalent body) es-
tablished by and amongst the board of directors 
of an issuer for the purpose of determining and 
approving the compensation arrangements for 
the executive officers of the issuer; and 
‘‘(B) if no such committee exists with re-
spect to an issuer, the independent members of 
the entire board of directors. 
‘‘(c) INDEPENDENCE STANDARDS FOR COMPENSA-
TION CONSULTANTS
AND OTHER COMMITTEE ADVI-
SORS.—Any compensation consultant or other similar ad-
viser to the compensation committee of any issuer shall 
meet standards for independence established by the Com-
mission by regulation. 
‘‘(d) COMPENSATION COMMITTEE AUTHORITY RE-
LATING TO COMPENSATION CONSULTANTS.— 
‘‘(1) IN
GENERAL.—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 a compensation consultant meeting the standards 
for independence promulgated pursuant to sub-
section (c), and the compensation committee shall be 
directly responsible for the appointment, compensa-
tion, and oversight of the work of such independent
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-
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
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
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
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—
(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;
(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.—
(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