Bill Summary
This legislation, titled the "Equity Payments to Employees While Receiving Federal Aid Act," requires major corporations that receive federal aid related to COVID-19 to make annual equity payments to their employees while the aid is still outstanding. These payments must be in the form of stock grants, and the amount granted must be at least equal to the average annual stock grant percentage of the previous three years. Employees must be given proportional equity grants based on their salary and tenure, with a maximum wage limit of $137,700. The Securities and Exchange Commission will be responsible for enforcing this legislation and may issue additional rules to do so. The bill also includes definitions for terms such as "employee," "federal aid," "major corporation," and "management employee." It is the sense of Congress that these equity grants should not replace any wages or benefits provided to employees.
Possible Impacts
1. Employees of major corporations that receive Federal aid related to COVID-19 may receive annual equity payments, potentially increasing their overall compensation.
2. The legislation specifically excludes certain individuals, such as those who own more than 5% of the voting shares of the corporation, from receiving equity payments. This could potentially limit the impact of the legislation for some people.
3. The Securities and Exchange Commission may enforce the requirements of this section, potentially resulting in legal action against corporations that do not comply with the legislation. This could affect corporations and their employees.
[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6851 Introduced in House (IH)]
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116th CONGRESS
2d Session
H. R. 6851
To require major corporations receiving Federal aid related to COVID-19
to make annual payments of equity to employees of the corporation while
such aid is outstanding, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 13, 2020
Ms. Ocasio-Cortez introduced the following bill; which was referred to
the Committee on Financial Services
_______________________________________________________________________
A BILL
To require major corporations receiving Federal aid related to COVID-19
to make annual payments of equity to employees of the corporation while
such aid is outstanding, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. EQUITY PAYMENTS TO EMPLOYEES WHILE RECEIVING FEDERAL AID.
(a) In General.--Any major corporation that receives Federal aid
related to COVID-19 shall, until the date on which all such Federal aid
is repaid to the Federal Government, make an annual grant of equity to
the employees of the corporation as provided under this section.
(b) Payment Amount.--
(1) Total amount.--
(A) In general.--The aggregate number of shares of
stock granted by a corporation under this section with
respect to a year shall, as a percentage of the
corporation's total shares outstanding, be equal to or
greater than the prior annual stock grant percentage.
(B) Prior annual stock grant percentage.--In this
paragraph, the term ``prior annual stock grant
percentage'' means the average, over the 3 years
preceding January 1, 2020, of the annual total number
of shares of stock in any equity plans of the
corporation and shares underlying any stock option
plans of the corporation, taken together, as a percent
to the corporation's total shares outstanding.
(2) Individual amounts.--The equity grant for each
individual employee shall be at least in proportion to a
formula taking into account that employee's salary adjusted for
tenure with each year of tenure counting equally, and with a
wage limit of $137,700.
(c) Other Requirements and Authorities.--
(1) Form of grant.--A grant of equity under this section
shall be a grant of whole shares of stock through a restricted
stock plan, a leveraged or non-leveraged Employee Stock
Ownership Plan, or a stock bonus plan.
(2) Prohibition on conditions.--A grant of equity to an
employee under this section may not be conditioned on the
purchase of company stock or any employee performance
evaluations of any kind.
(3) Voting and dividend rights.--Equity granted under this
section shall be equal, in terms of voting rights and dividend
rights, to the class of securities of the corporation other
than those issued under this section that carry the highest
voting rights and dividend rights.
(4) Right to use federal aid.--In the case of a leveraged
Employee Stock Ownership Plan, the Federal aid related to
COVID-19 may be used by the corporation to finance the Employee
Stock Ownership Plan.
(d) Sense of Congress.--It is the sense of the Congress that annual
grants of equity made under this section should not substitute for any
wages or benefits of any kind that were part of the total compensation
of an employee in the year before such grants are received.
(e) Rulemaking; Enforcement.--The Securities and Exchange
Commission shall issue such rules as may be necessary to carry out this
section and may enforce the requirements of this section.
(f) Definitions.--In this Section:
(1) Employee.--The term ``employee''--
(A) means any full-time or part-time employee in
good standing working for the corporation on the date
of the receipt of Federal aid related to COVID-19; and
(B) does not include--
(i) any individual who owns more than 5
percent of the voting shares of the
corporation;
(ii) a Named Executive Officer; and
(iii) any management employee participating
in an equity compensation plan before the
corporation received the Federal aid related to
COVID-19.
(2) Federal aid.--The term ``Federal aid'' means any
emergency lending provided under section 13(3) of the Federal
Reserve Act or any Federal financial support in the form of a
grant, loan, or loan guarantee.
(3) Major corporation.--The term ``major corporation''
means any issuer--
(A) the securities of which are traded on a
national securities exchange;
(B) the securities of which are required to be
registered with the Securities and Exchange Commission
under section 12(g) or 15(d) of the Securities Exchange
Act of 1934; or
(C) that is an accelerated filed, as defined in
section 240.12b-2 of title 17, Code of Federal
Regulations.
(4) Management employee.--The term ``management employee''
means any employee who supervises another employee.
(5) Securities terms.--The terms ``issuer'', ``national
securities exchange'', and ``security'' have the meaning give
those terms, respectively, under section 3 of the Securities
Exchange Act of 1934 (15 U.S.C. 78c).
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