[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4291 Introduced in House (IH)]







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.--
            ``(1) Compensation plan.--
                    ``(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''.
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