Bill Summary
The Corporate Management Accountability Act of 2024 is a bill that aims to hold corporate executives accountable for their actions rather than shareholders. It states that any fines or penalties imposed on a company, which cannot be deducted from taxes, must be paid by the executives rather than the shareholders. The bill defines terms such as "Commission" as the Securities and Exchange Commission, "covered fine or similar penalty" as any amount that is not tax-deductible and is paid by the company, and "reporting company" as an organization that is registered under the Securities Exchange Act of 1934. The bill also requires the Commission to issue rules within 360 days to ensure that companies disclose whether they have established procedures to recoup the cost of fines and penalties from the compensation of their named executive officers. The bill requires companies to provide a description of these procedures and disclose the amount that has been recouped in the past 3 years. If a company does not have such procedures, they must explain why they are not necessary for the benefit of their shareholders.
Possible Impacts
1. The legislation may affect corporate executives by holding them personally responsible for fines and penalties, instead of allowing shareholders to bear the burden.
2. The legislation may affect shareholders by potentially increasing their personal liability if the company is found guilty of misconduct.
3. The legislation may affect reporting companies by requiring them to disclose information about their executive compensation and any recouped funds from fines and penalties.
[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 9736 Introduced in House (IH)]
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118th CONGRESS
2d Session
H. R. 9736
To ensure that irresponsible corporate executives, rather than
shareholders, pay fines and penalties.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 20, 2024
Ms. Porter introduced the following bill; which was referred to the
Committee on Financial Services
_______________________________________________________________________
A BILL
To ensure that irresponsible corporate executives, rather than
shareholders, pay fines and penalties.
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 ``Corporate Management Accountability
Act of 2024''.
SEC. 2. FINE, PENALTY, AND SETTLEMENT ACCOUNTABILITY.
(a) Definitions.--In this section--
(1) the term ``Commission'' means the Securities and
Exchange Commission;
(2) the term ``covered fine or similar penalty''--
(A) means any amount--
(i) that is denied a deduction under
paragraph (1) of section 162(f) of the Internal
Revenue Code; or
(ii) constituting restitution or paid to
come into compliance with law as described in
paragraph (2) of such section; and
(B) includes any fine or similar penalty--
(i) that is paid by a reporting company;
and
(ii) with respect to which the Commission
determines disclosure under subsection (b)(1)
is appropriate;
(3) the term ``issuer'' has the meaning given the term in
section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a));
(4) the term ``named executive officer''--
(A) means an individual for whom disclosure is
required under section 229.402(a)(3) of title 17, Code
of Federal Regulations; and
(B) includes any other employee of a reporting
company with respect to whom the Commission determines
disclosure under subsection (b)(1) is appropriate; and
(5) the term ``reporting company'' means an issuer--
(A) the securities of which are registered under
section 12 of the Securities Exchange Act of 1934 (15
U.S.C. 78l); or
(B) that is required to file reports under section
15(d) of the Securities Exchange Act of 1934 (15 U.S.C.
78o(d)).
(b) Requirement To Issue Rules.--Not later than 360 days after the
date of enactment of this Act, the Commission shall issue final rules
to require each reporting company, in each annual report submitted
under section 13 or section 15(d) of the Securities Exchange Act of
1934 (15 U.S.C. 78m and 78o(d)), or in each proxy statement filed
pursuant to section 14(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78n(a)) for an annual meeting of shareholders, to--
(1) disclose whether the reporting company, in order to
align the incentives of those managing the reporting company
with the incentives of the shareholders of the reporting
company, has established procedures to recoup from compensation
paid to, and to withhold from future compensation paid to, any
named executive officer all or a portion of the cost of any
covered fine or similar penalty that has been paid by the
reporting company;
(2) if the reporting company has established procedures
described in paragraph (1)--
(A) provide a description of those procedures; and
(B) disclose the amount that the reporting company
has recouped from each named executive officer under
those procedures during each of the 3 most recent
fiscal years; and
(3) if the reporting company has not established procedures
described in paragraph (1), provide an explanation of why no
such procedures are necessary for the benefit of the
shareholders of the reporting company.
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