Last night, by a 247-171 vote, with 237 Democrats and 10 Republicans voting in favor, the House of Representatives passed H.R. 1664, the "Pay for Performance Act of 2009." However, the prospects for passage of the bill in the Senate are unclear.
The final bill differs in some respects from the version of the bill that was reported out of the House Financial Services Committee last week. Both the earlier version and the version that passed would prohibit institutions receiving TARP assistance from making payments to executives as part of new or existing compensation arrangements that are "unreasonable or excessive," as defined in standards adopted by the Treasury Secretary, "in consultation with the Congressional Oversight Panel," or that "includes any bonus or other supplemental payment, whether payable before employment, during employment, or after termination of employment, that is not directly based on performance-based measures" set forth in standards adopted by the Treasury Secretary, in consultation with the COP.
In contrast to earlier versions, the version of the bill passed by the House includes a de minimus severance benefit exception (for employees terminated after five years of service, not exceeding the lesser of one year's annual salary or $250,000) and exceptions for institutions that have entered into a "comprehensive agreement" with the Treasury Secretary to repay all TARP funds received. The bill also imposes additional executive compensation reporting requirements on TARP recipients and calls for the creation of a new "Commission on Executive Compensation" that would be charged with studying the executive compensation systems of TARP recipients and the "effects of implementing increased shareholder voice in executive compensation