ARRA - Text of the Dodd Amendment - RE: Executive Compensation

TITLE VI--EXECUTIVE COMPENSATION OVERSIGHT

   SEC. 6001. DEFINITIONS.

    For purposes of this title, the following definitions shall apply:

    (1) SENIOR EXECUTIVE OFFICER.--The
term ``senior executive officer'' means an individual who is 1 of the
top 5 most highly paid executives of a public company, whose
compensation is required to be disclosed pursuant to the Securities
Exchange Act of 1934, and any regulations issued thereunder, and
non-public company counterparts.

    (2) GOLDEN PARACHUTE PAYMENT.--The
term ``golden parachute payment'' means any payment to a senior
executive officer for departure from a company for any reason, except
for payments for services performed or benefits accrued.

    (3) TARP.--The
term ``TARP'' means the Troubled Asset Relief Program established under
the Emergency Economic Stabilization Act of 2008 (Public Law 110-343,
12 U.S.C. 5201 et seq.).

    (4) TARP RECIPIENT.--The term
``TARP recipient'' means any entity that has received or will receive
financial assistance under the financial assistance provided under the
TARP.

    (5) SECRETARY.--The term ``Secretary'' means the Secretary of the Treasury.

    (6) COMMISSION.--The term ``Commission'' means the Securities and Exchange Commission.

   SEC. 6002. EXECUTIVE COMPENSATION AND CORPORATE GOVERNANCE.

    (a) In General.--During
the period in which any obligation arising from financial assistance
provided under the TARP remains outstanding, each TARP recipient shall
be subject to--

    (1) the standards established by the Secretary under this title; and

    (2) the provisions of section 162(m)(5) of the Internal Revenue Code of 1986, as applicable.

    (b) Standards Required.--The
Secretary shall require each TARP recipient to meet appropriate
standards for executive compensation and corporate governance.

    (c) Specific Requirements.--The standards established under subsection (b) shall include--

   
(1) limits on compensation that exclude incentives for senior executive
officers of the TARP recipient to take unnecessary and excessive risks
that threaten the value of such recipient during the period that any
obligation arising from TARP assistance is outstanding;

    (2) a
provision for the recovery by such TARP recipient of any bonus,
retention award, or incentive compensation paid to a senior executive
officer and any of the next 20 most highly-compensated employees of the
TARP recipient based on statements of earnings, revenues, gains, or
other criteria that are later found to be materially inaccurate;

   
(3) a prohibition on such TARP recipient making any golden parachute
payment to a senior executive officer or any of the next 5 most
highly-compensated employees of the TARP recipient during the period
that any obligation arising from TARP assistance is outstanding;

   
(4) a prohibition on such TARP recipient paying or accruing any bonus,
retention award, or incentive compensation during the period that the
obligation is outstanding to at least the 25 most highly-compensated
employees, or such higher number as the Secretary may determine is in
the public interest with respect to any TARP recipient;

    (5) a
prohibition on any compensation plan that would encourage manipulation
of the reported earnings of such TARP recipient to enhance the
compensation of any of its employees; and

    (6) a requirement for the establishment of a Board Compensation Committee that meets the requirements of section 6003.

    (d) Certification of Compliance.--The
chief executive officer and chief financial officer (or the equivalents
thereof) of each TARP recipient shall provide a written certification
of compliance by the TARP recipient with the requirements of this
title--

    (1) in the case of a TARP recipient, the securities
of which are publicly traded, to the Securities and Exchange
Commission, together with annual filings required under the securities
laws; and

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    (2) in the case of a TARP recipient that is not a publicly traded company, to the Secretary.

   SEC. 6003. BOARD COMPENSATION COMMITTEE.

    (a) Establishment of Board Required.--Each
TARP recipient shall establish a Board Compensation Committee,
comprised entirely of independent directors, for the purpose of
reviewing employee compensation plans.

    (b) Meetings.--The
Board Compensation Committee of each TARP recipient shall meet at least
semiannually to discuss and evaluate employee compensation plans in
light of an assessment of any risk posed to the TARP recipient from
such plans.

   SEC. 6004. LIMITATION ON LUXURY EXPENDITURES.

    (a) Policy Required.--The
board of directors of any TARP recipient shall have in place a
company-wide policy regarding excessive or luxury expenditures, as
identified by the Secretary, which may include excessive expenditures
on--

    (1) entertainment or events;

    (2) office and facility renovations;

    (3) aviation or other transportation services; or

   
(4) other activities or events that are not reasonable expenditures for
conferences, staff development, reasonable performance incentives, or
other similar measures conducted in the normal course of the business
operations of the TARP recipient.

   SEC. 6005. SHAREHOLDER APPROVAL OF EXECUTIVE COMPENSATION.

    (a) Annual Shareholder Approval of Executive Compensation.--Any
proxy or consent or authorization for an annual or other meeting of the
shareholders of any TARP recipient during the period in which any
obligation arising from financial assistance provided under the TARP
remains outstanding shall permit a separate shareholder vote to approve
the compensation of executives, as disclosed pursuant to the
compensation disclosure rules of the Commission (which disclosure shall
include the compensation discussion and analysis, the compensation
tables, and any related material).

    (b) Nonbinding Vote.--A
shareholder vote described in subsection (a) shall not be binding on
the board of directors of a TARP recipient, and may not be construed as
overruling a decision by such board, nor to create or imply any
additional fiduciary duty by such board, nor shall such vote be
construed to restrict or limit the ability of shareholders to make
proposals for inclusion in proxy materials related to executive
compensation.

    (c) Deadline for Rulemaking.--Not
later than 1 year after the date of enactment of this Act, the
Commission shall issue any final rules and regulations required by this
section.

   SEC. 6006. REVIEW OF PRIOR PAYMENTS TO EXECUTIVES.

    (a) In General.--The
Secretary shall review bonuses, retention awards, and other
compensation paid to employees of each entity receiving TARP assistance
before the date of enactment of this Act to determine whether any such
payments were excessive, inconsistent with the purposes of this Act or
the TARP, or otherwise contrary to the public interest.

    (b) Negotiations for Reimbursement.--If
the Secretary makes a determination described in subsection (a), the
Secretary shall seek to negotiate with the TARP recipient and the
subject employee for appropriate reimbursements to the Federal
Government with respect to compensation or bonuses.