109th CONGRESS
1st Session
H. R. 4291
To amend the Securities Exchange Act of 1934 to require additional
disclosure to shareholders of executive compensation.
IN THE HOUSE OF REPRESENTATIVES
November 10, 2005
Mr. FRANK of Massachusetts (for himself, Mr. GEORGE MILLER of California,
Mr. OBEY, Mr. RANGEL, Mr. SABO, and Ms. VELAZQUEZ) introduced the following
bill; which was referred to the Committee on Financial Services
A BILL
To amend the Securities Exchange Act of 1934 to require additional
disclosure to shareholders of executive compensation.
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 `Protection Against Executive Compensation
Abuse Act'.
SEC. 2. ADDITIONAL EXECUTIVE COMPENSATION DISCLOSURES.
(a) Amendment- Section 16 of the Securities Exchange Act of 1934 (15 U.S.C.
78n) is amended by adding at the end the following new subsection:
`(i) Additional Executive Compensation Disclosures-
`(A) ANNUAL STATEMENTS AND PROXY MATERIALS- Each issuer required to
file an annual report under section 13(a) shall include in such annual
report, and in any proxy solicitation materials accompanying a proxy
solicitation on behalf of the management of the issuer in connection
with an annual or other meeting of the holders of the securities of
the issuer, a comprehensive statement of such issuer's compensation
plan for the principal executive officers of the issuer. Such compensation
plan shall include--
`(i) any type of compensation (whether present, deferred, or contingent)
paid or to be paid to such principal executive officers, including--
`(I) an estimate of the present value of any accrued pension of
such officers;
`(II) the estimated market value of any other benefits received
by such officers; and
`(III) any agreements or understandings concerning any type of compensation;
`(ii) the short- and long-term performance measures that the issuer
uses for determining the compensation of such principal executive
officers and whether such measures were met by such officers during
the preceding year; and
`(iii) the policy of the issuer adopted pursuant to the rules promulgated
under paragraph (3).
`(B) SHAREHOLDER APPROVAL- The proxy solicitation materials containing
the statement required by subparagraph (A) shall require a separate
shareholder vote to approve such compensation plan.
`(2) SHAREHOLDER APPROVAL OF GOLDEN PARACHUTE COMPENSATION- In any proxy
solicitation material that concerns an acquisition, merger, consolidation,
or proposed sale or other disposition of substantially all the assets
of an issuer--
`(A) the person making such solicitation shall disclose in the proxy
solicitation material, in a clear and simple form in accordance with
regulations of the Commission, any agreements or understandings that
such person has with any principal executive officers of such issuer
(or of the acquiring issuer, if such issuer is not the acquiring issuer)
concerning any type of compensation (whether present, deferred, or contingent)
that are based on or otherwise relate to the acquisition, merger, consolidation,
sale, or other disposition; and
`(B) such proxy solicitation material shall require a separate shareholder
vote to approve such agreements or understandings.
`(3) RETURN OF CERTAIN COMPENSATION- The Commission shall prescribe rules
requiring each issuer to adopt a policy requiring the reimbursement by
any principle executive officer to the issuer of any compensation received
by such officer that is--
`(A) not provided for in the compensation plan required by paragraph
(1);
`(B) based on performance by the officer that does not meet the job
performance measures identified in such statement;
`(C) incentive compensation or bonuses received by such officer within
18 months before any negative material restatement by the issuer; or
`(D) related to fraud or misrepresentation on the part of such officer.
`(4) PRINCIPAL EXECUTIVE OFFICER- For purposes of this subsection, the
term `principal executive officer' means--
`(A) all individuals serving as the chief executive officer of an issuer,
or acting in a similar capacity, during the most recent fiscal year,
regardless of compensation level; and
`(B) for an issuer with total assets of--
`(i) more than $250,000,000 but less than $500,000,000, the 2 most
highly compensated executive officers, other than an individual identified
under subparagraph (A), that were serving as executive officers of
an issuer at the end of the most recent fiscal year; or
`(ii) more than $500,000,000, the 4 most highly compensated executive
officers, other than an individual identified under subparagraph (A),
that were serving as executive officers of an issuer at the end of
the most recent fiscal year.'.
(b) Deadline for Rulemaking- Not later than 1 year after the date of the
enactment of this Act, the Securities and Exchange Commission shall issue
any final rules and regulations required by the amendments made by subsection
(a).
SEC. 3. CLEAR AND SIMPLE INTERNET DISCLOSURE.
Section 16(a)(4) of the Securities Exchange Act of 1934 (15 U.S.C. 78p(a)(4))
is amended--
(1) in subparagraph (B), by inserting `, in a clear, simple, and readily
accessible format,' after `each such statement'; and
(2) in subparagraph (C), by inserting `, in a clear, simple, and readily
accessible format,' after `that statement'.
END
