Senate Leader Introduces Legislation to Curb Excessive Compensation

Senator Richard Durbin, Assistant Majority Leader, has introduced two pieces of legislation to curb excessive executive compensation by requiring a super majority shareholder vote approving excessive compensation and denying companies a tax deduction under IRC ¶162 with regard to excessive compensation. The Excessive Pay Shareholder Approval Act, S. 1006, would amend the Exchange Act to require a 60 percent shareholder vote to approve a compensation structure in which any employee receives more than 100 times more than the average employee of that company. The SEC would be directed to adopt rules requiring proxy materials for the supermajority shareholder vote to include the amount of compensation paid to the company’s lowest and highest paid employee, the average amount of compensation paid to all employees, the number of employees who are paid more than 100 times the average amount of compensation for all employees, and the total amount of compensation paid to employees who are paid more than 100 times the average amount of compensation for all employees.

Similarly, the Excessive Pay Capped Deduction Act, S 1007, would limit the normal tax deduction for compensation for executives to 100 times the compensation of the average worker at that company. Both bills would broadly define compensation to include wages, salary, fees, commissions, fringe benefits, deferred compensation, retirement contributions, options, bonuses, property, and any other form of remuneration that the SEC determines is appropriate, in consultation with the Secretary of the Treasury.

S. 1007 would require, under the IRC, that employers providing excessive compensation to any employee during a taxable year must file a report with Treasury with respect to such taxable year. The report must include the amount of compensation of the company employees that received the lowest and highest amount of compensation during such taxable year, the average compensation of all employees, the number of employees who are receiving compensation that is more than 100 times the average compensation of all employees, and the amounts of that compensation.

Congress Passes Legislation Imposing Disclosure and Fiduciary Duties on Treasury Program to Remove Toxic Securities from Financial Institutions
Congress has passed and cleared for the President legislation providing for additional oversight of the Treasury’s Public-Private Investment Program (PPIP), which is designed to remove toxic securities from the balance sheets of financial institutions. The Helping Families