BILL NUMBER: SB 1208 AMENDED
BILL TEXT
AMENDED IN SENATE MARCH 29, 2012
INTRODUCED BY Senator Leno
FEBRUARY 22, 2012
An act relating to amend Sections 1502.1
and 2117.1 of the Corporations Code, relating to publicly
traded corporations.
LEGISLATIVE COUNSEL'S DIGEST
SB 1208, as amended, Leno. Publicly traded corporations: retiree
compensation: disclosure.
Existing law provides for the formation and regulation of
corporations. Existing law requires that domestic and
foreign publicly traded corporations file annually with the Secretary
of State a report statement disclosing
the compensation, as specified, paid to each of the members of the
corporation's board of directors and its 5 most highly compensated
executive officers who are not members of the board, and the chief
executive officer, if he or she is not among those executive
officers. Existing law requires the Secretary of
State to make that information, together with other information
required to be included in that statement, publicly available, as
specified.
This bill would, instead, require that a publicly traded
corporation include in that report total compensation, as defined,
paid to each member of the board of directors, the principal
executive officer, principal financial officer, and each of the 3
most highly compensated executive officers other than the principal
executive officer or principal financial officer.
This bill would also require a publicly traded corporation to
include in that statement filed with the Secretary of State total
compensation information with respect to each of the corporation's 5
most highly compensated retirees, and the names of those retirees.
This bill would state the intention of the Legislature to
enact legislation that would require those corporations to also
report to the secretary all forms of compensation, including pensions
and benefits from other types of employee benefit plans, to the 5
most highly compensated retired executive officers of the corporation
.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1502.1 of the
Corporations Code is amended to read:
1502.1. (a) In addition to the statement required pursuant to
Section 1502, every publicly traded corporation shall file annually,
within 150 days after the end of its fiscal year, a statement, on a
form prescribed by the Secretary of State, that includes all of the
following information:
(1) The name of the independent auditor that prepared the most
recent auditor's report on the corporation's annual financial
statements.
(2) A description of other services, if any, performed for the
corporation during its two most recent fiscal years and the period
between the end of its most recent fiscal year and the date of the
statement by the foregoing independent auditor, by its parent
corporation, or by a subsidiary or corporate affiliate of the
independent auditor or its parent corporation.
(3) The name of the independent auditor employed by the
corporation on the date of the statement, if different from the
independent auditor listed pursuant to paragraph (1).
(4) The total compensation for the most recent fiscal
year of the corporation paid to (A) each member of the
board of directors and paid to , (B) the
principal executive officer, (C) the principal financial officer, and
(D) each of the five three most
highly compensated executive officers , other than the principal
executive officer and principal financial officer,
of the corporation who are not members of the board of directors
, including the number of any shares issued, options for
shares granted, and similar equity-based compensation granted to each
of those persons. If the chief executive officer is not among the
five most highly compensated executive officers of the corporation,
the compensation paid to the chief executive officer shall also be
included .
(5) A description of any loan, including the amount and terms of
the loan, made to any member of the board of directors by the
corporation during the corporation's two most recent fiscal years at
an interest rate lower than the interest rate available from
unaffiliated commercial lenders generally to a similarly-situated
borrower.
(6) The total compensation for the most recent fiscal year of the
publicly traded corporation paid to each of the five persons retired
from the corporation who received from the corporation the highest
amounts of total compensation that the corporation paid to retirees,
and the name of each of those retirees.
(6)
(7) A statement indicating whether an order for relief
has been entered in a bankruptcy case with respect to the
corporation, its executive officers, or members of the board of
directors of the corporation during the 10 years preceding the date
of the statement.
(7)
(8) A statement indicating whether any member of the
board of directors or executive officer of the corporation was
convicted of fraud during the 10 years preceding the date of the
statement, if the conviction has not been overturned or expunged.
(8)
(9) A description of any material pending legal
proceedings, other than ordinary routine litigation incidental to the
business, to which the corporation or any of its subsidiaries is a
party or of which any of their property is the subject, as specified
by Item 103 of Regulation S-K of the Securities Exchange Commission
(Section 229.103 of Title 12 of the Code of Federal Regulations). A
description of any material legal proceeding during which the
corporation was found legally liable by entry of a final judgment or
final order that was not overturned on appeal during the five years
preceding the date of the statement.
(b) For purposes of this section, the following definitions apply:
(1) "Publicly traded corporation" means a corporation, as defined
in Section 162, that is an issuer as defined in Section 3 of the
Securities Exchange Act of 1934, as amended (15 U.S.C. Sec. 78c), and
has at least one class of securities listed or admitted for trading
on a national securities exchange, on the OTC Bulletin Board, or on
the electronic service operated by Pink OTC Markets Inc.
(2) "Executive officer" means the chief
principal executive officer, principal financial officer,
president, any vice president in charge of a principal business
unit, division, or function, any other officer of the corporation
who performs a policymaking function, or any other person who
performs similar policymaking functions for the corporation.
(3) "Compensation" (A)
"Total compensation" as used in paragraph (4) of
subdivision (a) means all plan and nonplan compensation
awarded to, earned by , including the number of any
shares issued, options for shares granted, and similar equity-based
compensation, and all perquisite and other personal benefits, granted
or awarded to, earned by, or paid to the person for all
services rendered in all capacities to the corporation and to its
subsidiaries, as the compensation is specified by
in each case, within the meaning of those terms pursuant to
Item 402 of Regulation S-K of the Securities and Exchange
Commission (Section 229.402 of Title 17 of the Code of Federal
Regulations).
(B) "Total compensation" as used in paragraph (6) of subdivision
(a) has the same meaning given in subparagraph (A), except that the
compensation is granted, awarded, or paid to the person after the
person's retirement from the corporation for services rendered in all
capacities to the corporation and to its subsidiaries prior to his
or her retirement.
(4) "Loan" as used in paragraph (5) of subdivision (a) excludes an
advance for expenses permitted under subdivision (d) of Section 315,
the corporation's payment of life insurance premiums permitted under
subdivision (e) of Section 315, and an advance of expenses permitted
under Section 317.
(c) This statement shall be available and open to the public for
inspection. The Secretary of State shall provide access to all
information contained in this statement by means of an online
database.
(d) A corporation shall certify that the information it provides
pursuant to this section is true and correct. No claim may be made
against the state for inaccurate information contained in statements
filed under this section with the Secretary of State.
SEC. 2. Section 2117.1 of the
Corporations Code is amended to read:
2117.1. (a) In addition to the statement required pursuant to
Section 2117, every publicly traded foreign corporation shall file
annually, within 150 days after the end of its fiscal year, on a form
prescribed by the Secretary of State, a statement that includes all
of the following information:
(1) The name of the independent auditor that prepared the most
recent auditor's report on the publicly traded foreign corporation's
annual financial statements.
(2) A description of other services, if any, performed for the
publicly traded foreign corporation during its two most recent fiscal
years and the period between the end of its most recent fiscal year
and the date of the statement by the foregoing independent auditor,
by its parent corporation, or by a subsidiary or corporate affiliate
of the independent auditor or its parent corporation.
(3) The name of the independent auditor employed by the foreign
corporation on the date of the statement, if different from the
independent auditor listed pursuant to paragraph (1).
(4) The total compensation for the most recent fiscal
year of the publicly traded foreign corporation paid to (A)
each member of the board of directors , (B) the principal
executive officer, (C) the principal financial officer, and
paid to (D) each of the five
three most highly compensated executive officers
, other than the principal executive officer or principal
financial officer, of the foreign corporation who are not
members of the board of directors , including the number of
any shares issued, options for shares granted, and similar
equity-based compensation granted to each of those persons. If the
chief executive officer is not among the five most highly compensated
executive officers of the corporation, the compensation paid to the
chief executive officer shall also be included .
(5) A description of any loan, including the amount and terms of
the loans, made to any member of the board of directors by the
publicly traded foreign corporation during the foreign corporation's
two most recent fiscal years at an interest rate lower than the
interest rate available from unaffiliated commercial lenders
generally to a similarly situated borrower.
(6) The total compensation for the most recent fiscal year of the
publicly traded foreign corporation paid to each of the five persons
retired from the corporation who received from the corporation the
highest amounts of total compensation that the corporation paid to
retirees, and the name of each of those retirees.
(6)
(7) A statement indicating whether an order for relief
has been entered in a bankruptcy case with respect to the foreign
corporation, its executive officers, or members of the board of
directors of the foreign corporation during the 10 years preceding
the date of the statement.
(7)
(8) A statement indicating whether any member of the
board of directors or executive officer of the publicly traded
foreign corporation was convicted of fraud during the 10 years
preceding the date of the statement, which conviction has not been
overturned or expunged.
(8)
(9) A description of any material pending legal
proceedings, other than ordinary routine litigation incidental to the
business, to which the corporation or any of its subsidiaries is a
party or of which any of their property is the subject, as specified
by Item 103 of Regulation S-K of the Securities Exchange Commission
(Section 229.103 of Title 12 of the Code of Federal Regulations). A
description of any material legal proceeding during which the
corporation was found legally liable by entry of a final judgment or
final order that was not overturned on appeal during the five years
preceding the date of the statement.
(b) For purposes of this section, the following definitions apply:
(1) "Publicly traded foreign corporation" means a foreign
corporation, as defined in Section 171, that is an issuer as defined
in Section 3 of the Securities Exchange Act of 1934, as amended (15
U.S.C. Sec. 78c), and has at least one class of securities listed or
admitted for trading on a national securities exchange, on the OTC
Bulletin Board, or on the electronic service operated by Pink OTC
Markets Inc.
(2) "Executive officer" means the chief
principal executive officer, principal financial officer,
president, any vice president in charge of a principal business
unit, division, or function, any other officer of the corporation
who performs a policymaking function, or any other person who
performs similar policymaking functions for the corporation.
(3) "Compensation" (A)
"Total compensation" as used in paragraph (4) of
subdivision (a) means all plan and nonplan compensation ,
including the number of any shares issued, options for shares
granted, and similar equity-based compensation, and all perquisites
and other personal benefits granted or awarded to, earned by,
or paid to the person for all services rendered in all capacities to
the corporation and to its subsidiaries, as the compensation
is specified by in each case, within the meaning of
those terms pursuant to Item 402 of Regulation S-K of the
Securities and Exchange Commission (Section 229.402 of Title 17 of
the Code of Federal Regulations).
(B) "Total compensation" as used in paragraph (6) of subdivision
(a) has the same meaning given in subparagraph (A), except that the
compensation is granted, awarded, or paid to the person after the
person's retirement from the corporation for services rendered in all
capacities to the corporation and to its subsidiaries prior to his
or her retirement.
(4) "Loan" as used in paragraph (5) of subdivision (a) excludes an
advance for expenses, the foreign corporation's payment of life
insurance premiums, and an advance of litigation expenses, in each
instance as permitted according to the applicable law of the state or
place of incorporation or organization of the foreign corporation.
(c) This statement shall be available and open to the public for
inspection. The Secretary of State shall provide access to all
information contained in this statement by means of an online
database.
(d) A foreign corporation shall certify that the information it
provides pursuant to this section is true and correct. No claim may
be made against the state for inaccurate information contained in
statements filed under this section with the Secretary of State.
SECTION 1. It is the intent of the Legislature
to enact legislation that would require publicly traded corporations
to report to the Secretary of State all forms of compensation,
including pensions and benefits from other types of employee benefit
plans, to the five most highly compensated retired executive officers
of the corporation.