I 
113TH CONGRESS 
2D SESSION 
H. R. 5662 
To amend the Internal Revenue Code of 1986 to expand the denial of 
deduction for certain excessive employee remuneration. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 18, 2014 
Mr. VAN HOLLEN (for himself and Mr. CLYBURN) introduced the following 
bill; which was referred to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to expand 
the denial of deduction for certain excessive employee 
remuneration. 
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 ‘‘CEO–Employee Pay 
Fairness Act of 2014’’. 
SEC. 2. EXPANSION OF DENIAL OF DEDUCTION FOR CER-
TAIN 
EXCESSIVE 
EMPLOYEE 
REMUNERA-
TION. 
(a) EXPANDED APPLICATION OF DEDUCTION DE-
NIAL IF PAY FAIRNESS REQUIREMENT NOT MET.—Sec-
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tion 162(m) of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new para-
graph: 
‘‘(7) SPECIAL
RULE
IN
CASE
OF
COMPANIES 
NOT MEETING PAY FAIRNESS REQUIREMENT.— 
‘‘(A) IN GENERAL.—In the case of a pub-
licly held corporation which does not meet the 
pay fairness requirement of subparagraph (B) 
for the taxable year— 
‘‘(i) no deduction shall be allowed 
under this chapter for applicable employee 
remuneration with respect to any employee 
to the extent that the amount of such re-
muneration for the taxable year with re-
spect 
to 
such 
employee 
exceeds 
$1,000,000, and 
‘‘(ii) paragraph (4) shall be applied 
without regard to subparagraphs (B), (C), 
and (D) thereof. 
For purposes of the preceding sentence, the 
term ‘employee’ includes any officer or director 
of the taxpayer and any former officer, director, 
or employee of the taxpayer. 
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‘‘(B) PAY FAIRNESS REQUIREMENT.—The 
pay fairness requirement of this subparagraph 
is satisfied if— 
‘‘(i)(I) the average compensation paid 
by the taxpayer to or for all applicable 
United States employees for the taxable 
year, exceeds 
‘‘(II) the inflation and productivity 
growth adjusted average of such compensa-
tion for the preceding taxable year, and 
‘‘(ii) the aggregate compensation paid 
by the employer to or for all applicable 
United States employees for the taxable 
year is not less than the aggregate of such 
compensation for the preceding taxable 
year. 
‘‘(C) APPLICABLE
UNITED
STATES
EM-
PLOYEE.—For purposes of this paragraph, the 
term 
‘applicable 
United 
States 
employee’ 
means, with respect to any taxable year, any 
employee— 
‘‘(i) whose services with respect to the 
employer are substantially all performed 
within the United States, and 
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‘‘(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 
the cost-of-living adjustment determined under 
section 1(f)(3) for the calendar year in which 
the taxable year begins, determined by sub-
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