Corporate Management Accountability Act of 2021
Bill: S.2145 | Sponsor: Sen. Reed, Jack (D-RI)
Policy area: Finance and Financial Sector

Summary:
Corporate Management Accountability Act of 2021
This bill directs the Securities and Exchange Commission to promulgate final rules requiring certain issuers of securities to disclose whether the issuer has established procedures to recoup from compensation paid to its executive officers fines and penalties for illegal behavior. If the issuer has not established such procedures, it must explain why it has not done so.

To ensure that irresponsible corporate executives, rather than 
                 shareholders, pay fines and penalties.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Corporate Management Accountability 
Act of 2021''.

SEC. 2. FINE, PENALTY, AND SETTLEMENT ACCOUNTABILITY.

    (a) Definitions.--In this section--
            (1) the term ``accountable executive''--
                    (A) means an individual for whom disclosure is 
                required under section 229.402(a)(3) of title 17, Code 
                of Federal Regulations; and
                    (B) includes any other employee of a reporting 
                company with respect to whom the Commission determines 
                disclosure under subsection (b)(1) is appropriate;
            (2) the term ``Commission'' means the Securities and 
        Exchange Commission;
            (3) the term ``covered fine or similar penalty''--
                    (A) means any amount to which section 162(f) of the 
                Internal Revenue Code of 1986 applies; and
                    (B) includes any fine, penalty, or payment--
                            (i) that is paid or incurred by a reporting 
                        company; and
                            (ii) with respect to which the Commission 
                        determines disclosure under subsection (b) 
                        should be required;
            (4) the term ``issuer'' has the meaning given the term in 
        section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 
        78c(a)); and
            (5) the term ``reporting company'' means an issuer--
                    (A) the securities of which are registered under 
                section 12 of the Securities Exchange Act of 1934 (15 
                U.S.C. 78l); or
                    (B) that is required to file reports under section 
                15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 
                78o(d)).
    (b) Requirement To Issue Rules.--Not later than 360 days after the 
date of enactment of this Act, the Commission shall issue final rules 
to require each reporting company, in each annual report submitted 
under section 13 or section 15(d) of the Securities Exchange Act of 
1934 (15 U.S.C. 78m, 78o(d)), or in each proxy statement filed pursuant 
to section 14(a) of the Securities Exchange Act of 1934 (15 U.S.C. 
78n(a)) for an annual meeting of shareholders, to--
            (1) disclose whether the reporting company has established 
        procedures to recoup from compensation paid to, and to withhold 
        from future compensation paid to, any accountable executive all 
        or a portion of the cost of any covered fine or similar penalty 
        that has been paid or incurred by the reporting company;
            (2) if the reporting company has established procedures 
        described in paragraph (1)--
                    (A) provide a description of those procedures; and
                    (B) disclose the amount that the reporting company 
                has recouped from each accountable executive under 
                those procedures during each of the 3 most recent 
                fiscal years; and
            (3) if the reporting company has not established procedures 
        described in paragraph (1), provide an explanation of why the 
        reporting company has not done so.
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