Bill Summary
The Corporate Management Accountability Act of 2021 is a proposed bill in the United States that aims to hold corporate executives accountable for their actions by ensuring that they pay fines and penalties, rather than just shareholders. This act would require reporting companies (those whose securities are registered or are required to file reports) to disclose whether they have established procedures to recoup the cost of any fines or penalties from executive compensation. If they have not established such procedures, they must provide an explanation for why. The bill also defines key terms like "accountable executive" and "covered fine or similar penalty" and gives the Securities and Exchange Commission the authority to issue rules for implementation. Overall, this legislation aims to promote responsible behavior among corporate executives and discourage wrongdoing that could ultimately harm shareholders and the company.
Possible Impacts
1. The Corporate Management Accountability Act of 2021 could affect corporate executives by holding them personally accountable for any fines or penalties incurred by their company. This may motivate executives to act more responsibly and ethically in order to avoid financial repercussions.
2. Shareholders may be affected by this legislation if they are financially impacted by the fines or penalties incurred by the company. This could potentially lead to a loss of investment or decreased value of their shares.
3. Employees of reporting companies may be affected by the disclosure of procedures for recouping compensation from accountable executives. This could potentially create tension or resentment among employees if they feel their bosses are being unfairly punished.
[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 2145 Introduced in Senate (IS)]
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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 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 2021''.
SEC. 2. FINE, PENALTY, AND SETTLEMENT ACCOUNTABILITY.
(a) Definitions.--In this section--
(1) the term ``accountable executive''--
(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;
(2) the term ``Commission'' means the Securities and
Exchange Commission;
(3) the term ``covered fine or similar penalty''--
(A) means any amount to which section 162(f) of the
Internal Revenue Code of 1986 applies; and
(B) includes any fine, penalty, or payment--
(i) that is paid or incurred by a reporting
company; and
(ii) with respect to which the Commission
determines disclosure under subsection (b)
should be required;
(4) 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)); 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, 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 has established
procedures to recoup from compensation paid to, and to withhold
from future compensation paid to, any accountable executive all
or a portion of the cost of any covered fine or similar penalty
that has been paid or incurred 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 accountable executive 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 the
reporting company has not done so.
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