California Senate Bill SB1208 Amended / Bill

 BILL NUMBER: SB 1208AMENDED 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.