Corporate Management Accountability Act of 2019

IB Union Calendar No. 268 116TH CONGRESS 1ST SESSION H. R. 4320 [Report No. 116–337] To ensure that irresponsible corporate executives, rather than shareholders, pay fines and penalties. IN THE HOUSE OF REPRESENTATIVES SEPTEMBER 12, 2019 Ms. PORTER introduced the following bill; which was referred to the Committee on Financial Services DECEMBER 11, 2019 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed [Strike out all after the enacting clause and insert the part printed in italic] [For text of introduced bill, see copy of bill as introduced on September 12, 2019] VerDate Sep 11 2014 23:55 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6652 E:\BILLS\H4320.RH H4320 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 4320 RH A BILL To ensure that irresponsible corporate executives, rather than shareholders, pay fines and penalties. VerDate Sep 11 2014 23:55 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6652 E:\BILLS\H4320.RH H4320 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 4320 RH 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 Management 4 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 Securities 9 and Exchange Commission; 10 (2) the term ‘‘covered fine or similar penalty’’— 11 (A) means a fine or similar penalty, as that 12 term is defined in Treasury Regulation section 13 1.162–21(b); and 14 (B) includes any fine or similar penalty— 15 (i) that is paid by a reporting com- 16 pany; and 17 (ii) with respect to which the Commis- 18 sion determines disclosure under subsection 19 (b)(1) is appropriate; 20 (3) the term ‘‘issuer’’ has the meaning given the 21 term in section 3(a) of the Securities Exchange Act 22 of 1934 (15 U.S.C. 78c(a)); 23 (4) the term ‘‘named executive officer’’— 24 VerDate Sep 11 2014 23:55 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6203 E:\BILLS\H4320.RH H4320 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 4320 RH (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 report- 4 ing company with respect to whom the Commis- 5 sion determines disclosure under subsection 6 (b)(1) is appropriate; and 7 (5) the term ‘‘reporting company’’ means an 8 issuer— 9 (A) the securities of which are registered 10 under section 12 of the Securities Exchange Act 11 of 1934 (15 U.S.C. 78l); or 12 (B) that is required to file reports under 13 section 15(d) of the Securities Exchange Act of 14 1934 (15 U.S.C. 78o(d)). 15 (b) REQUIREMENT TO ISSUE RULES.—Not later than 16 360 days after the date of enactment of this Act, the Com- 17 mission shall issue final rules to require each reporting 18 company, in each annual report submitted under section 19 13 or section 15(d) of the Securities Exchange Act of 1934 20 (15 U.S.C. 78m and 78o(d)), or in each proxy statement 21 filed pursuant to section 14(a) of the Securities Exchange 22 Act of 1934 (15 U.S.C. 78n(a)) for an annual meeting of 23 shareholders, to— 24 VerDate Sep 11 2014 23:55 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6203 E:\BILLS\H4320.RH H4320 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 4320 RH (1) disclose whether the reporting company, in 1 order to align the incentives of those managing the re- 2 porting company with the incentives of the share- 3 holders of the reporting company, has established pro- 4 cedures to recoup from compensation paid to, and to 5 withhold from future compensation paid to, any 6 named executive officer all or a portion of the cost of 7 any covered fine or similar penalty that has been 8 paid by the reporting company; 9 (2) if the reporting company has established pro- 10 cedures described in paragraph (1)— 11 (A) provide a description of those proce- 12 dures; and 13 (B) disclose the amount that the reporting 14 company has recouped from each named execu- 15 tive officer under those procedures during each of 16 the 3 most recent fiscal years; and 17 (3) if the reporting company has not established 18 procedures described in paragraph (1), provide an ex- 19 planation of why no such procedures are necessary for 20 the benefit of the shareholders of the reporting com- 21 pany. 22 VerDate Sep 11 2014 23:55 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6203 E:\BILLS\H4320.RH H4320 pamtmann on DSKBC07HB2PROD with BILLS Union Calendar No. 268 116TH CONGRESS 1ST SESSION H. R. 4320 [Report No. 116–337] A BILL To ensure that irresponsible corporate executives, rather than shareholders, pay fines and penalties. DECEMBER 11, 2019 Reported with an amendment, committed to the Com- mittee of the Whole House on the State of the Union, and ordered to be printed VerDate Sep 11 2014 23:55 Dec 11, 2019 Jkt 099200 PO 00000 Frm 00006 Fmt 6651 Sfmt 6651 E:\BILLS\H4320.RH H4320 pamtmann on DSKBC07HB2PROD with BILLS