Corporate Management Accountability Act of 2019

II 116TH CONGRESS 1ST SESSION S. 1885 To ensure that irresponsible corporate executives, rather than shareholders, pay fines and penalties. IN THE SENATE OF THE UNITED STATES JUNE 18, 2019 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 2019’’. 5 SEC. 2. FINE, PENALTY, AND SETTLEMENT ACCOUNT- 6 ABILITY. 7 (a) DEFINITIONS.—In this section— 8 (1) the term ‘‘Commission’’ means the Securi- 9 ties and Exchange Commission; 10 VerDate Sep 11 2014 03:41 Jun 19, 2019 Jkt 034408 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1885.IS S1885 pbinns on DSK79D2C42PROD with BILLS 2 •S 1885 IS (2) the term ‘‘covered fine or similar pen- 1 alty’’— 2 (A) means a fine or similar penalty, as 3 that term is defined in Treasury Regulation 4 section 1.162–21(b); and 5 (B) includes any fine or penalty— 6 (i) that is paid by a reporting com- 7 pany; and 8 (ii) with respect to which the Commis- 9 sion determines disclosure under sub- 10 section (b)(1) is appropriate; 11 (3) the term ‘‘issuer’’ has the meaning given 12 the term in section 3(a) of the Securities Exchange 13 Act of 1934 (15 U.S.C. 78c(a)); 14 (4) the term ‘‘named executive officer’’— 15 (A) means an individual for whom disclo- 16 sure is required under section 229.402(a)(3) of 17 title 17, Code of Federal Regulations; and 18 (B) includes any other employee of a re- 19 porting company with respect to whom the 20 Commission determines disclosure under sub- 21 section (b)(1) is appropriate; and 22 (5) the term ‘‘reporting company’’ means an 23 issuer— 24 VerDate Sep 11 2014 03:41 Jun 19, 2019 Jkt 034408 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1885.IS S1885 pbinns on DSK79D2C42PROD with BILLS 3 •S 1885 IS (A) the securities of which are registered 1 under section 12 of the Securities Exchange 2 Act of 1934 (15 U.S.C. 78l); or 3 (B) that is required to file reports under 4 section 15(d) of the Securities Exchange Act of 5 1934 (15 U.S.C. 78o(d)). 6 (b) REQUIREMENT TO ISSUE RULES.—Not later 7 than 360 days after the date of enactment of this Act, 8 the Commission shall issue final rules to require each re- 9 porting company, in each annual report submitted under 10 section 13 or section 15(d) of the Securities Exchange Act 11 of 1934 (15 U.S.C. 78m and 78o(d)), or in each proxy 12 statement filed pursuant to section 14(a) of the Securities 13 Exchange Act of 1934 (15 U.S.C. 78n(a)) for an annual 14 meeting of shareholders, to— 15 (1) disclose whether the reporting company, in 16 order to align the incentives of those managing the 17 reporting company with the incentives of the share- 18 holders of the reporting company, has established 19 procedures to recoup from compensation paid to, 20 and to withhold from future compensation paid to, 21 any named executive officer all or a portion of the 22 cost of any covered fine or similar penalty that has 23 been paid by the reporting company; 24 VerDate Sep 11 2014 03:41 Jun 19, 2019 Jkt 034408 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1885.IS S1885 pbinns on DSK79D2C42PROD with BILLS 4 •S 1885 IS (2) if the reporting company has established 1 procedures described in paragraph (1)— 2 (A) provide a description of those proce- 3 dures; and 4 (B) disclose the amount that the reporting 5 company has recouped from each named execu- 6 tive officer under those procedures during each 7 of the 3 most recent fiscal years; and 8 (3) if the reporting company has not estab- 9 lished procedures described in paragraph (1), pro- 10 vide an explanation of why no such procedures are 11 necessary for the benefit of the shareholders of the 12 reporting company. 13 Æ VerDate Sep 11 2014 03:41 Jun 19, 2019 Jkt 034408 PO 00000 Frm 00004 Fmt 6652 Sfmt 6301 E:\BILLS\S1885.IS S1885 pbinns on DSK79D2C42PROD with BILLS