‘‘(i) whose services with respect to the 
employer are substantially all performed 
within the United States, and 
‘‘(ii) whose compensation from the 
employer for the taxable year does not ex-
ceed the dollar amount in effect under sec-
tion 414(q)(1)(B)(i) with respect to the 
calendar year in which such taxable year 
begins. 
‘‘(D) 
INFLATION
AND
PRODUCTIVITY 
GROWTH
ADJUSTED
AVERAGE.—The inflation 
and productivity growth adjusted average of 
compensation under subparagraph (B)(i)(II) for 
any taxable year shall be determined by multi-
plying— 
‘‘(i) the average of the compensation 
paid by the taxpayer to or for all applica-
ble United States employees for the taxable 
year, by 
‘‘(ii) the sum of the cost-of-living ad-
justment and the productivity adjustment 
for the taxable year. 
‘‘(E) COST-OF-LIVING ADJUSTMENT.—For 
purposes of subparagraph (D)(ii), the cost-of- 
living adjustment for any taxable year shall be 
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the cost-of-living adjustment determined under 
section 1(f)(3) for the calendar year in which 
the taxable year begins, determined by sub-
stituting ‘the second preceding calendar year’ 
for ‘calendar year 1992’ in subparagraph (B) 
thereof. 
‘‘(F) PRODUCTIVITY
ADJUSTMENT.—For 
purposes of subparagraph (D)(ii)— 
‘‘(i) IN
GENERAL.—The productivity 
adjustment for the taxable year shall be an 
amount (expressed as a percentage) equal 
to the average annual increase in the busi-
ness productivity index for the period be-
ginning with calendar year 2000 and end-
ing with the calendar year preceding the 
calendar year in which the taxable year be-
gins. 
‘‘(ii) 
BUSINESS
PRODUCTIVITY 
INDEX.—The term ‘business productivity 
index’ means the nonfarm business produc-
tivity index published by the Bureau of 
Labor Statistics as adjusted by the Sec-
retary to account for depreciation. 
‘‘(G) COMPENSATION.—For purposes of 
this subparagraph, the term ‘compensation’ 
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means, with respect to any employee, the sum 
of— 
‘‘(i) the employee’s wages on which 
the tax under section 3101(b) is imposed, 
plus 
‘‘(ii) any amount described in para-
graph (9), (11), (12), or (14) of section 
6051(a) with respect to the employee. 
‘‘(H) AGGREGATION RULES.—Rules simi-
lar to the rules of paragraph (5)(B)(iii) shall 
apply for purposes of this paragraph. 
‘‘(I) REGULATIONS.—The Secretary may 
prescribe such regulations as are necessary to 
carry out the purposes of this paragraph, in-
cluding adjustments to the pay fairness require-
ments of subparagraph (B)— 
‘‘(i) to prevent avoidance of this para-
graph through changes in the composition 
of the taxpayer’s workforce, and 
‘‘(ii) to account for significant, non- 
tax-motivated changes in the size and com-
position of the taxpayer’s workforce (in-
cluding mergers, spinoffs, or changes in 
the occupational composition of a tax-
payer’s workforce).’’. 
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(b) MODIFICATION OF DEFINITION OF COVERED EM-
PLOYEES.— 
(1) IN
GENERAL.—Paragraph (3) of section 
162(m) of such Code is amended— 
(A) in subparagraph (A), by striking ‘‘as 
of the close of the taxable year, such employee 
is the chief executive officer of the taxpayer or’’ 
and inserting ‘‘such employee is the chief execu-
tive officer or the chief financial officer of the 
taxpayer at any time during the taxable year, 
or was’’, 
(B) in subparagraph (B) by striking 
‘‘(other than the chief executive officer)’’ and 
inserting ‘‘(other than any individual described 
in subparagraph (A))’’, and 
(C) by striking ‘‘or’’ at the end of subpara-
graph (A), by striking the period at the end of 
subparagraph (B) and inserting ‘‘, or’’, and by 
adding at the end the following: 
‘‘(C) was a covered employee of the tax-
payer (or any predecessor) for any preceding 
taxable year beginning after December 31, 
2014.’’. 
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(2) 
TECHNICAL
AMENDMENT.—Section 
162(m)(3)(B) of such Code is amended by striking 
‘‘4 highest’’ and inserting ‘‘3 highest’’. 
(c) APPLICABLE EMPLOYEE REMUNERATION PAID 
TO
BENEFICIARIES, ETC.—Paragraph (4) of section 
162(m) of such Code is amended by adding at the end 
the following new subparagraph: 
‘‘(H) SPECIAL RULE FOR REMUNERATION 
PAID TO BENEFICIARIES, ETC.—Remuneration 
shall not fail to be applicable employee remu-
neration merely because it is includible in the 
income of, or paid to, a person other than the 
covered employee, including after the death of 
the covered employee.’’. 
(d) EXPANSION OF APPLICABLE EMPLOYER TO IN-
CLUDE NON-LISTED PUBLIC COMPANIES.—Paragraph 
(2) of section 162(m) of such Code is amended to read 
as follows: 
‘‘(2) PUBLICLY HELD CORPORATION.—For pur-
poses of this subsection, the term ‘publicly held cor-
poration’ means any corporation which is an issuer 
(as defined in section 3 of the Securities Exchange 
Act of 1934)— 
‘‘(A) that has a class of securities reg-
istered under section 12 of such Act, or 
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‘‘(B) that is required to file reports under 
section 15(d) of such Act.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2014. 
Æ 
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