Corporate Management Accountability Act of 2021

II 117TH CONGRESS 1ST SESSION S. 2145 To ensure that irresponsible corporate executives, rather than shareholders, pay fines and penalties. IN THE SENATE OF THE UNITED STATES JUNE 21, 2021 Mr. REED introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To ensure that irresponsible corporate executives, rather than shareholders, pay fines and penalties. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Corporate Manage- 4 ment Accountability Act of 2021’’. 5 SEC. 2. FINE, PENALTY, AND SETTLEMENT ACCOUNT- 6 ABILITY. 7 (a) DEFINITIONS.—In this section— 8 (1) the term ‘‘accountable executive’’— 9 VerDate Sep 11 2014 16:38 Jun 25, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S2145.IS S2145 pamtmann on DSKBC07HB2PROD with BILLS 2 •S 2145 IS (A) means an individual for whom disclo- 1 sure is required under section 229.402(a)(3) of 2 title 17, Code of Federal Regulations; and 3 (B) includes any other employee of a re- 4 porting company with respect to whom the 5 Commission determines disclosure under sub- 6 section (b)(1) is appropriate; 7 (2) the term ‘‘Commission’’ means the Securi- 8 ties and Exchange Commission; 9 (3) the term ‘‘covered fine or similar pen- 10 alty’’— 11 (A) means any amount to which section 12 162(f) of the Internal Revenue Code of 1986 13 applies; and 14 (B) includes any fine, penalty, or pay- 15 ment— 16 (i) that is paid or incurred by a re- 17 porting company; and 18 (ii) with respect to which the Commis- 19 sion determines disclosure under sub- 20 section (b) should be required; 21 (4) the term ‘‘issuer’’ has the meaning given 22 the term in section 3(a) of the Securities Exchange 23 Act of 1934 (15 U.S.C. 78c(a)); and 24 VerDate Sep 11 2014 16:38 Jun 25, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2145.IS S2145 pamtmann on DSKBC07HB2PROD with BILLS 3 •S 2145 IS (5) the term ‘‘reporting company’’ means an 1 issuer— 2 (A) the securities of which are registered 3 under section 12 of the Securities Exchange 4 Act of 1934 (15 U.S.C. 78l); or 5 (B) that is required to file reports under 6 section 15(d) of the Securities Exchange Act of 7 1934 (15 U.S.C. 78o(d)). 8 (b) REQUIREMENT TO ISSUE RULES.—Not later 9 than 360 days after the date of enactment of this Act, 10 the Commission shall issue final rules to require each re- 11 porting company, in each annual report submitted under 12 section 13 or section 15(d) of the Securities Exchange Act 13 of 1934 (15 U.S.C. 78m, 78o(d)), or in each proxy state- 14 ment filed pursuant to section 14(a) of the Securities Ex- 15 change Act of 1934 (15 U.S.C. 78n(a)) for an annual 16 meeting of shareholders, to— 17 (1) disclose whether the reporting company has 18 established procedures to recoup from compensation 19 paid to, and to withhold from future compensation 20 paid to, any accountable executive all or a portion of 21 the cost of any covered fine or similar penalty that 22 has been paid or incurred by the reporting company; 23 (2) if the reporting company has established 24 procedures described in paragraph (1)— 25 VerDate Sep 11 2014 16:38 Jun 25, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2145.IS S2145 pamtmann on DSKBC07HB2PROD with BILLS 4 •S 2145 IS (A) provide a description of those proce- 1 dures; and 2 (B) disclose the amount that the reporting 3 company has recouped from each accountable 4 executive under those procedures during each of 5 the 3 most recent fiscal years; and 6 (3) if the reporting company has not estab- 7 lished procedures described in paragraph (1), pro- 8 vide an explanation of why the reporting company 9 has not done so. 10 Æ VerDate Sep 11 2014 16:38 Jun 25, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6301 E:\BILLS\S2145.IS S2145 pamtmann on DSKBC07HB2PROD with BILLS