The "Stop Subsidizing Multimillion Dollar Corporate Bonuses Act," which seeks to prohibit companies from deducting more than $1 million in compensation to any current or former employee under Section 162(m) of the Internal Revenue Code, was introduced in the House this week by Rep. Lloyd Doggett (D-TX). The bill is identical to a Senate bill introduced in late August by Senators Jack Reed (D-RI) and Richard Blumenthal (D- CT) which has seen no action but was widely discussed during the recent debate over the budget. Mirroring its Senate counterpart (S.1476), the bill would:
- Expand the companies to which section 162(m) applies. Currently the provision applies to companies issuing common stock. The bill would apply it to any company filing periodic reports with the SEC;
- Broaden the applicability of the $1 million limitation to all employees, rather than the CEO and the top three other most highly compensated officers other than the CFO as under current law;
- Eliminate the exceptions for performance-based and commission-based compensation.