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SECTION 1. PROHIBITION ON CERTAIN COMPENSATION.

(a) Prohibition on Certain Compensation Not Based on Performance
Standards.--Section 111 of the Emergency Economic Stabilization Act of
2008 (12 U.S.C. 5221) is amended by redesignating subsections (e)
through (h) as subsections (f) through (i), and inserting after
subsection (d) the following:
''(e) Prohibition on Certain Compensation Not Based on Performance
Standards.--
''(1) Prohibition.--No financial institution that has
received or receives a direct capital investment under the
Troubled Assets Relief Program under this title, or with
respect to the Federal National Mortgage Association, the
Federal Home Loan Mortgage Corporation, or a Federal home loan
bank, under the amendments made by section 1117 of the Housing
and Economic Recovery Act of 2008, may, while that capital
investment remains outstanding, make a compensation payment,
other than a longevity bonus or a payment in the form of
restricted stock, to any executive or employee under any
existing compensation arrangement, or enter into a new
compensation payment arrangement, if such compensation payment
or compensation payment arrangement--
''(A) provides for compensation that is
unreasonable or excessive, as defined in standards
established by the Secretary, in consultation with the
Chairperson of the Congressional Oversight Panel
established under section 125, in accordance with
paragraph (2); or
''(B) includes any bonus or other supplemental
payment, whether payable before employment, during
employment, or after termination of employment, that is
not directly based on performance-based measures set
forth in standards established by the Secretary in
accordance with paragraph (2).
An institution shall not become subject to the requirements of
this paragraph as a result of doing business with a recipient
of a direct capital investment under the TARP or under the
amendments made by the Housing and Economic Recovery Act of
2008.
''(2) Standards.--Not later than 30 days after the date of
enactment of this subsection, the Secretary, with the approval
of the agencies that are members of the Federal Financial
Institutions Examination Council, and in consultation with the
Chairperson of the Congressional Oversight Panel established
under section 125, shall establish the following:
''(A) Unreasonable and excessive compensation
standards.--Standards that define 'unreasonable or
excessive' for purposes of subparagraph (1)(A).
''(B) Performance-based standards.--Standards for
performance-based measures that a financial institution
must apply when determining whether it may provide a
bonus or retention payment under paragraph (1)(B). Such
performance measures shall include--
''(i) the stability of the financial
institution and its ability to repay or begin
repaying the United States for any capital
investment received under this title;
''(ii) the performance of the individual
executive or employee to whom the payment
relates;
''(iii) adherence by executives and
employees to appropriate risk management
requirements; and
''(iv) other standards which provide
greater accountability to shareholders and
taxpayers.
''(3) Clarification relating to severance pay.--For
purposes of this subsection, a compensation payment or
compensation payment arrangement shall not include a severance
payment paid by an employer in the ordinary course of business
to an employee who has been employed by the employer for a
minimum of 5 years upon dismissal of that employee, unless such
severance payment is in an amount greater than the annual
salary of such employee or $250,000.
''(4) Conditional exemption.--
''(A) Repayment agreement.--Paragraph (1) shall not
apply to a financial institution that has entered into
a comprehensive agreement with the Secretary to repay
the United States, in accordance with a schedule and
terms established by the Secretary, all outstanding
amounts of any direct capital investment or investments
received by such institution under this title.
''(B) Default.--If the Secretary determines that an
institution that has entered into an agreement as
provided for in subparagraph (A) has defaulted on such
agreement, the Secretary shall require that any
compensation payments made by such institution that
would have been subject to paragraph (1) if the
institution had not entered into such an agreement be
surrendered to the Treasury.
''(5) Reporting requirement.--
''(A) In general.--Any financial institution that
is subject to the requirements of paragraph (1) shall,
not later than 90 days after the date of enactment of
this subsection and annually on March 31 each year
thereafter, transmit to the Secretary, who shall make a
report which states how many persons (officers,
directors, and employees) received or will receive
total compensation in that fiscal year in each of the
following amounts:
''(i) over $500,000;
''(ii) over $1,000,000;
''(iii) over $2,000,000;
''(iv) over $3,000,000; and
''(v) over $5,000,000.
The report shall distinguish amounts the institution
considers to be a bonus and the reason for such
distinction. The name or identity of persons receiving
compensation in such amounts shall not be required in
such reports. The Secretary shall make such reports
available on the Internet. Any financial institution
subject to this paragraph shall issue a retrospective
annual report for 2008 and both a prospective and
retrospective annual report for each subsequent
calendar year until such institution ceases to be
subject to this paragraph.
''(B) Total compensation defined.--For purposes of
this paragraph, the term 'total compensation' includes
all cash payments (including without limitation salary,
bonus, retention payments), all transfers of property,
stock options, sales of stock, and all contributions by
the company (or its affiliates) for that person's
benefit or for the benefit of that person's immediate
family members.
''(6) Community financial institution exemption.--
''(A) In general.--The Secretary may exempt
community financial institutions from any of the
requirements of this subsection, when the Secretary
finds that such an exemption is consistent with the
purposes of this subsection.
''(B) Community financial institution defined.--For
the purposes of this paragraph, the term 'community
financial institution' means a financial institution
that receives or received a direct capital investment
under the Troubled Asset Relief Program under this
title of not more than $250,000,000.
''(7) Compensation considerations under the standards.--In
establishing standards under this subsection, the Secretary
shall consider as compensation any transfer of property,
payment of money, or provision of services by the financial
institution that causes any increase in wealth on the part of
an executive or employee.''.
(b) Revision to Rule of Construction.--Section 111(b)(3)(D)(iii) of
the Emergency Economic Stabilization Act of 2008 (12 U.S.C.
5221(b)(3)(D)(iii)) is amended by inserting before the period the
following: '', except that an entity subject to subsection (e) may not,
while a capital investment described in that subsection remains
outstanding, pay a bonus or other supplemental payment that is
otherwise prohibited by clause (i) without regard to when the
arrangement to pay such a bonus was entered into''.

SEC. 2. EXECUTIVE COMPENSATION COMMISSION.

Section 111 of the Emergency Economic Stabilization Act of 2008 (12
U.S.C. 5221), as amended by section 1, is further amended by adding at
the end the following new subsection:
''(j) Executive Compensation Commission.--
''(1) Establishment.--There is hereby established a
commission to be known as the 'Commission on Executive
Compensation' (hereinafter in this subsection referred to as
the 'Commission').
''(2) Duties.--
''(A) Study required.--The Commission shall conduct
a study of the executive compensation system for
recipients of a direct capital investment under the
TARP. In conducting such study, the Commission shall
examine--
''(i) how closely executive pay is
currently linked to company performance;
''(ii) how closely executive pay has been
linked to company performance in the past;
''(iii) how executive pay can be more
closely linked to company performance in the
future;
''(iv) the factors influencing executive
pay; and
''(v) how current executive pay incentives
affect executive behavior.
''(B) Consideration of proposals.--The Commission
shall consider, in addition to any recommendations made
by members of the Commission or outside advisers, the
effects of implementing increased shareholder voice in
executive compensation.
''(3) Report.--
''(A) In general.--Not later than 90 days after the
date on which all members of the Commission have been
appointed, the Commission shall deliver a report to the
President and to the Congress containing--
''(i) recommendations for legislative
action;
''(ii) recommendations for executive
action, including actions taken by the
Department of the Treasury or any other agency
for which the Commission has recommendations;
and
''(iii) recommendations for voluntary
actions to be taken by recipients of a direct
capital investment under the TARP.
''(B) Minority views.--The report required under
subparagraph (A) shall be accompanied by any separate
recommendations that members of the Commission wish to
make, but that were not agreed upon by the Commission
for purposes of the report required under subparagraph
(A). Such separate recommendations must take the form
of a proposal for aligning executive pay with the long-
term health of the company.
''(4) Composition.--
''(A) The Commission shall be composed of 9
members, appointed as follows:
''(i) 1 member appointed by the Council of
Economic Advisers.
''(ii) 1 member appointed by the Speaker of
the House of Representatives.
''(iii) 1 member appointed by the Senate
Majority Leader.
''(iv) 1 member appointed by the House
Minority Leader.
''(v) 1 member appointed by the Senate
Minority Leader.
''(vi) 1 member appointed by the Chairman
of the Financial Services Committee of the
House of Representatives.
''(vii) 1 member appointed by the Ranking
Member of the Financial Services Committee of
the House of Representatives.
''(viii) 1 member appointed by the Chairman
of the Banking, Housing, and Urban Affairs
Committee of the Senate.
''(ix) 1 member appointed by the Ranking
Member of the Banking, Housing, and Urban
Affairs Committee of the Senate.
''(B) Each appointing entity shall name its member
within 21 days of the date of the enactment of this
subsection.
''(C) Any vacancy in the Commission shall be filled
in the same manner as the original appointment.
''(5) Activities.--
''(A) The Chairman of the Financial Services
Committee of the House of Representatives shall select
one member to serve as the Chairman of the Commission,
and such Chairman will call to order the first meeting
of the Commission within 10 business days after the
date on which all members of the Commission have been
appointed.
''(B) The Commission shall meet at least once every
30 days and may meet more frequently at the discretion
of the Chairman.
''(C) The Commission shall solicit and consider
policy proposals from Members of Congress, the
financial sector, academia and other fields as the
Commission deems necessary.
''(D) The Commission shall hold at least two public
hearings, and may hold more at the discretion of the
Chairman.
''(6) Actions by the commission.--A decision of a majority
of commissioners present at a meeting of the Commission shall
constitute the decision of the Commission where the Commission
is given discretion to act, including but not limited to,
recommendations to be made in the report described in paragraph
3.
''(7) Staff.--The Chair may hire at his or her discretion
up to seven professional staff members.
''(8) Termination.--The Commission shall terminate 30 days
after the date on which the Commission submits its report to
the President and the Congress under paragraph 3.
''(9) Authorization of appropriations.--There are
authorized to be appropriated such sums as may be necessary to
carry out this subsection.''.

Passed the House of Representatives April 1, 2009.

Attest:

LORRAINE C. MILLER,

Clerk.
A:
(Sec. 1) Amends the Emergency Economic Stabilization Act of 2008 (EESA) to prohibit a financial institution that receives or has received a direct capital investment under the Troubled Asset Relief Program (TARP) (or with respect to the Federal National Mortgage Association [Fannie Mae], the Federal Home Loan Mortgage Corporation [Freddie Mac], or a federal home loan bank, under the Housing and Economic Recovery Act of 2008) from making a compensation payment (other than a longevity bonus or a payment in the form of restricted stock) to an executive or employee under a preexisting compensation arrangement, or from entering into a new compensation payment arrangement, while that capital investment remains outstanding, if such compensation: (1) is unreasonable or excessive according to standards established by the Secretary of the Treasury in consultation with the Chairperson of the Congressional Oversight Panel; or (2) includes any bonus or other supplemental payment, whether payable before employment, during employment, or after termination of employment, that is not directly based upon such standards.

Declares such prohibition inapplicable to an institution that did business with a recipient of a direct capital investment under the TARP, or under amendments made by the Housing and Economic Recovery Act of 2008.

Instructs the Secretary, with the approval of the agencies that are members of the Federal Financial Institutions Examination Council, and in consultation with the Chairperson of the Congressional Oversight Panel, to establish standards governing: (1) unreasonable and excessive compensation; and (2) performance-based measures that a financial institution must apply when determining whether it may provide a bonus or retention payment.

Excludes from the meaning of compensation payment under this Act any severance payment paid upon the employee's dismissal by an employer in the ordinary course of business to an employee who has been employed for a minimum of five years, unless such severance payment is greater than the employee's annual salary or $250,000.

States that the prohibition against certain compensation not based upon performance standards does not apply to a financial institution that has entered into an agreement with the Secretary to repay the United States all outstanding amounts of any direct capital investment or investments it has received under this Act. Declares, however, that if an institution defaults on such an agreement, the Secretary shall require the institution to surrender to the Treasury the compensation payments that would have been subject to such prohibition.

Requires financial institutions subject to this Act to report annually to the Secretary how many officers, directors, and employees received or will receive total compensation over each of five specified thresholds in that fiscal year.

Requires such report to distinguish amounts an institution considers to be a bonus and the reason for such distinction. Authorizes the Secretary to exempt community financial institutions from the requirements of this Act.

Defines total compensation as all cash payments (including without limitation salary, bonus, and retention payments), all transfers of property, stock options, sales of stock, and all contributions by the company (or its affiliates) for a person's benefit or for the benefit of that person's immediate family members.

States that the identity of persons receiving compensation in such amounts shall not be required in such reports.

Directs the Secretary to make such reports available on the Internet.

Requires a financial institution, while subject to this Act, to issue: (1) a retrospective annual report for 2008; and (2) both a prospective and retrospective annual report for each subsequent calendar year.

States that, for a financial institution that has received or receives a direct capital investment under TARP, while such investment remains outstanding, no otherwise prohibited bonus or other supplemental payment may be paid to employees or executives without regard to when the arrangement to pay such a bonus was entered into.

(Sec. 2) Establishes the Commission on Executive Compensation to study and report to the President and Congress on the executive compensation system for recipients of a direct capital investment under the TARP. Requires the report's recommendations for executive action and voluntary recipient actions to be accompanied by any separate minority view recommendations that members of the Commission wish to make, but that were not agreed upon by the Commission for the report.

Authorizes appropriations.