---
kind: "section"
citation: "12 U.S.C. § 5221"
title: "12"
title_heading: "Banks and Banking"
number: "5221"
heading: "Executive compensation and corporate governance"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/12/5221"
units:
  - "Chapter 52 — Emergency Economic Stabilization"
  - "Subchapter I — Troubled Assets Relief Program"
---

# §5221. Executive compensation and corporate governance

- (a) **Definitions—** For purposes of this section, the following definitions shall apply:
  - (1) **Senior executive officer—** The term “senior executive officer” means an individual who is 1 of the top 5 most highly paid executives of a public company, whose compensation is required to be disclosed pursuant to the Securities Exchange Act of 1934 [[15 U.S.C. 78a](/usc/15/78a.md) et seq.], and any regulations issued thereunder, and non-public company counterparts.
  - (2) **Golden parachute payment—** The term “golden parachute payment” means any payment to a senior executive officer for departure from a company for any reason, except for payments for services performed or benefits accrued.
  - (3) **TARP recipient—** The term “[TARP](/usc/12/5202.md?p=8) recipient” means any entity that has received or will receive financial assistance under the financial assistance provided under the [TARP](/usc/12/5202.md?p=8).
  - (4) **Commission—** The term “Commission” means the Securities and Exchange Commission.
  - (5) **Period in which obligation is outstanding; rule of construction—** For purposes of this section, the period in which any obligation arising from financial assistance provided under the [TARP](/usc/12/5202.md?p=8) remains outstanding does not include any period during which the Federal Government only holds warrants to purchase common stock of the [TARP](/usc/12/5202.md?p=8) recipient.
- (b) **Executive compensation and corporate governance—**
  - (1) **Establishment of standards—** During the period in which any obligation arising from financial assistance provided under the [TARP](/usc/12/5202.md?p=8) remains outstanding, each [TARP](/usc/12/5202.md?p=8) recipient shall be subject to—
    - (A) the standards established by the [Secretary](/usc/12/5202.md?p=7) under this section; and
    - (B) the provisions of [section 162(m)(5) of title 26](/usc/26/162.md?p=m-5), as applicable.
  - (2) **Standards required—** The [Secretary](/usc/12/5202.md?p=7) shall require each [TARP](/usc/12/5202.md?p=8) recipient to meet appropriate standards for executive compensation and corporate governance.
  - (3) **Specific requirements—** The standards established under [paragraph (2)](#b-2) shall include the following:
    - (A) Limits on compensation that exclude incentives for senior executive officers of the [TARP](/usc/12/5202.md?p=8) recipient to take unnecessary and excessive risks that threaten the value of such recipient during the period in which any obligation arising from financial assistance provided under the [TARP](/usc/12/5202.md?p=8) remains outstanding.
    - (B) A provision for the recovery by such [TARP](/usc/12/5202.md?p=8) recipient of any bonus, retention award, or incentive compensation paid to a senior executive officer and any of the next 20 most highly-compensated employees of the [TARP](/usc/12/5202.md?p=8) recipient based on statements of earnings, revenues, gains, or other criteria that are later found to be materially inaccurate.
    - (C) A prohibition on such [TARP](/usc/12/5202.md?p=8) recipient making any golden parachute payment to a senior executive officer or any of the next 5 most highly-compensated employees of the [TARP](/usc/12/5202.md?p=8) recipient during the period in which any obligation arising from financial assistance provided under the [TARP](/usc/12/5202.md?p=8) remains outstanding.
    - (D)
      - (i) A prohibition on such [TARP](/usc/12/5202.md?p=8) recipient paying or accruing any bonus, retention award, or incentive compensation during the period in which any obligation arising from financial assistance provided under the [TARP](/usc/12/5202.md?p=8) remains outstanding, except that any prohibition developed under this paragraph shall not apply to the payment of long-term restricted stock by such [TARP](/usc/12/5202.md?p=8) recipient, provided that such long-term restricted stock—
        - (I) does not fully vest during the period in which any obligation arising from financial assistance provided to that [TARP](/usc/12/5202.md?p=8) recipient remains outstanding;
        - (II) has a value in an amount that is not greater than ⅓ of the total amount of annual compensation of the employee receiving the stock; and
        - (III) is subject to such other terms and conditions as the [Secretary](/usc/12/5202.md?p=7) may determine is[^1] in the public interest.
      - (ii) The prohibition required under [clause (i)](#b-3-D-i) shall apply as follows:
        - (I) For any [financial institution](/usc/12/5202.md?p=5) that received financial assistance provided under the [TARP](/usc/12/5202.md?p=8) equal to less than $25,000,000, the prohibition shall apply only to the most highly compensated employee of the [financial institution](/usc/12/5202.md?p=5).
        - (II) For any [financial institution](/usc/12/5202.md?p=5) that received financial assistance provided under the [TARP](/usc/12/5202.md?p=8) equal to at least $25,000,000, but less than $250,000,000, the prohibition shall apply to at least the 5 most highly-compensated employees of the [financial institution](/usc/12/5202.md?p=5), or such higher number as the [Secretary](/usc/12/5202.md?p=7) may determine is in the public interest with respect to any [TARP](/usc/12/5202.md?p=8) recipient.
        - (III) For any [financial institution](/usc/12/5202.md?p=5) that received financial assistance provided under the [TARP](/usc/12/5202.md?p=8) equal to at least $250,000,000, but less than $500,000,000, the prohibition shall apply to the senior executive officers and at least the 10 next most highly-compensated employees, or such higher number as the [Secretary](/usc/12/5202.md?p=7) may determine is in the public interest with respect to any [TARP](/usc/12/5202.md?p=8) recipient.
        - (IV) For any [financial institution](/usc/12/5202.md?p=5) that received financial assistance provided under the [TARP](/usc/12/5202.md?p=8) equal to $500,000,000 or more, the prohibition shall apply to the senior executive officers and at least the 20 next most highly-compensated employees, or such higher number as the [Secretary](/usc/12/5202.md?p=7) may determine is in the public interest with respect to any [TARP](/usc/12/5202.md?p=8) recipient.
      - (iii) The prohibition required under [clause (i)](#b-3-D-i) shall not be construed to prohibit any bonus payment required to be paid pursuant to a written employment contract executed on or before February 11, 2009, as such valid employment contracts are determined by the [Secretary](/usc/12/5202.md?p=7) or the designee of the [Secretary](/usc/12/5202.md?p=7).
    - (E) A prohibition on any compensation plan that would encourage manipulation of the reported earnings of such [TARP](/usc/12/5202.md?p=8) recipient to enhance the compensation of any of its employees.
    - (F) A requirement for the establishment of a [Board](/usc/12/5202.md?p=2) Compensation Committee that meets the requirements of [subsection (c)](#c).
  - (4) **Certification of compliance—** The chief executive officer and chief financial officer (or the equivalents thereof) of each [TARP](/usc/12/5202.md?p=8) recipient shall provide a written certification of compliance by the [TARP](/usc/12/5202.md?p=8) recipient with the requirements of this section—
    - (A) in the case of a [TARP](/usc/12/5202.md?p=8) recipient, the securities of which are publicly traded, to the Securities and Exchange Commission, together with annual filings required under the securities laws; and
    - (B) in the case of a [TARP](/usc/12/5202.md?p=8) recipient that is not a publicly traded company, to the [Secretary](/usc/12/5202.md?p=7).
- (c) **Board Compensation Committee—**
  - (1) **Establishment of Board required—** Each [TARP](/usc/12/5202.md?p=8) recipient shall establish a [Board](/usc/12/5202.md?p=2) Compensation Committee, comprised entirely of independent [directors](/usc/12/5481.md?p=10), for the purpose of reviewing employee compensation plans.
  - (2) **Meetings—** The [Board](/usc/12/5202.md?p=2) Compensation Committee of each [TARP](/usc/12/5202.md?p=8) recipient shall meet at least semiannually to discuss and evaluate employee compensation plans in light of an assessment of any risk posed to the [TARP](/usc/12/5202.md?p=8) recipient from such plans.
  - (3) **Compliance by non-SEC registrants—** In the case of any [TARP](/usc/12/5202.md?p=8) recipient, the common or preferred stock of which is not registered pursuant to the Securities Exchange Act of 1934 [[15 U.S.C. 78a](/usc/15/78a.md) et seq.], and that has received $25,000,000 or less of [TARP](/usc/12/5202.md?p=8) assistance, the duties of the [Board](/usc/12/5202.md?p=2) Compensation Committee under this subsection shall be carried out by the [board](/usc/12/5202.md?p=2) of [directors](/usc/12/5481.md?p=10) of such [TARP](/usc/12/5202.md?p=8) recipient.
- (d) **Limitation on luxury expenditures—** The [board](/usc/12/5202.md?p=2) of [directors](/usc/12/5481.md?p=10) of any [TARP](/usc/12/5202.md?p=8) recipient shall have in place a company-wide policy regarding excessive or luxury expenditures, as identified by the [Secretary](/usc/12/5202.md?p=7), which may include excessive expenditures on—
  - (1) entertainment or events;
  - (2) office and facility renovations;
  - (3) aviation or other transportation services; or
  - (4) other activities or events that are not reasonable expenditures for staff development, reasonable performance incentives, or other similar measures conducted in the normal course of the business operations of the [TARP](/usc/12/5202.md?p=8) recipient.
- (e) **Shareholder approval of executive compensation—**
  - (1) **Annual shareholder approval of executive compensation—** Any proxy or consent or authorization for an annual or other meeting of the shareholders of any [TARP](/usc/12/5202.md?p=8) recipient during the period in which any obligation arising from financial assistance provided under the [TARP](/usc/12/5202.md?p=8) remains outstanding shall permit a separate shareholder vote to approve the compensation of executives, as disclosed pursuant to the compensation disclosure rules of the Commission (which disclosure shall include the compensation discussion and analysis, the compensation tables, and any related material).
  - (2) **Nonbinding vote—** A shareholder vote described in [paragraph (1)](#e-1) shall not be binding on the [board](/usc/12/5202.md?p=2) of [directors](/usc/12/5481.md?p=10) of a [TARP](/usc/12/5202.md?p=8) recipient, and may not be construed as overruling a decision by such [board](/usc/12/5202.md?p=2), nor to create or imply any additional fiduciary duty by such [board](/usc/12/5202.md?p=2), nor shall such vote be construed to restrict or limit the ability of shareholders to make proposals for inclusion in proxy materials related to executive compensation.
  - (3) **Deadline for rulemaking—** Not later than 1 year after February 17, 2009, the Commission shall issue any final rules and regulations required by this subsection.
- (f) **Review of prior payments to executives—**
  - (1) **In general—** The [Secretary](/usc/12/5202.md?p=7) shall review bonuses, retention awards, and other compensation paid to the senior executive officers and the next 20 most highly-compensated employees of each entity receiving [TARP](/usc/12/5202.md?p=8) assistance before February 17, 2009, to determine whether any such payments were inconsistent with the purposes of this section or the [TARP](/usc/12/5202.md?p=8) or were otherwise contrary to the public interest.
  - (2) **Negotiations for reimbursement—** If the [Secretary](/usc/12/5202.md?p=7) makes a determination described in [paragraph (1)](#f-1), the [Secretary](/usc/12/5202.md?p=7) shall seek to negotiate with the [TARP](/usc/12/5202.md?p=8) recipient and the subject employee for appropriate reimbursements to the Federal Government with respect to compensation or bonuses.
- (g) **No impediment to withdrawal by TARP recipients—** Subject to consultation with the [appropriate Federal banking agency](/usc/12/1861.md?p=b-1) (as that term is defined in [section 1813 of this title](/usc/12/1813.md)), if any, the [Secretary](/usc/12/5202.md?p=7) shall permit a [TARP](/usc/12/5202.md?p=8) recipient to repay any assistance previously provided under the [TARP](/usc/12/5202.md?p=8) to such [financial institution](/usc/12/5202.md?p=5), without regard to whether the [financial institution](/usc/12/5202.md?p=5) has replaced such [funds](/usc/12/5202.md?p=6) from any other source or to any waiting period, and when such assistance is repaid, the [Secretary](/usc/12/5202.md?p=7), at the market price, may liquidate warrants associated with such assistance.
- (h) **Regulations—** The [Secretary](/usc/12/5202.md?p=7) shall promulgate regulations to implement this section.

## Footnotes

[^1]: So in original. Probably should be “are”.

## Source credit

(Pub. L. 110–343, div. A, title I, § 111, Oct. 3, 2008, 122 Stat. 3776; Pub. L. 111–5, div. B, title VII, § 7001, Feb. 17, 2009, 123 Stat. 516; Pub. L. 111–22, div. A, title IV, § 403, May 20, 2009, 123 Stat. 1658.)

## Notes

### Editorial Notes

### References in Text

The Securities Exchange Act of 1934, referred to in subsecs. (a)(1) and (c)(3), is act June 6, 1934, ch. 404, 48 Stat. 881, which is classified principally to chapter 2B (§ 78a et seq.) of Title 15, Commerce and Trade. For complete classification of this Act to the Code, see section 78a of Title 15 and Tables.

### Amendments

2009—Pub. L. 111–5 amended section generally. Prior to amendment, section consisted of subsecs. (a) to (d) relating to applicability of requirements, direct purchases of troubled assets, auction purchases of troubled assets, and sunset of provisions, respectively.

Subsec. (g). Pub. L. 111–22 substituted “, at the market price, may liquidate warrants associated with such assistance” for “shall liquidate warrants associated with such assistance at the current market price”.