12 USC 5221 - Executive compensation and corporate governance

(a) Applicability 
Any financial institution that sells troubled assets to the Secretary under this chapter shall be subject to the executive compensation requirements of subsections (b) and (c) and the provisions under title 26, as provided under the amendment by section 302,1 as applicable.
(b) Direct purchases 

(1) In general 
Where the Secretary determines that the purposes of this chapter are best met through direct purchases of troubled assets from an individual financial institution where no bidding process or market prices are available, and the Secretary receives a meaningful equity or debt position in the financial institution as a result of the transaction, the Secretary shall require that the financial institution meet appropriate standards for executive compensation and corporate governance. The standards required under this subsection shall be effective for the duration of the period that the Secretary holds an equity or debt position in the financial institution.
(2) Criteria 
The standards required under this subsection shall include

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(A) limits on compensation that exclude incentives for senior executive officers of a financial institution to take unnecessary and excessive risks that threaten the value of the financial institution during the period that the Secretary holds an equity or debt position in the financial institution;
(B) a provision for the recovery by the financial institution of any bonus or incentive compensation paid to a senior executive officer based on statements of earnings, gains, or other criteria that are later proven to be materially inaccurate; and
(C) a prohibition on the financial institution making any golden parachute payment to its senior executive officer during the period that the Secretary holds an equity or debt position in the financial institution.
(3) Definition 
For purposes of this section, the term senior executive officer means an individual who is one of the top 5 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 et seq.], and any regulations issued thereunder, and non-public company counterparts.
(c) Auction purchases 
Where the Secretary determines that the purposes of this chapter are best met through auction purchases of troubled assets, and only where such purchases per financial institution in the aggregate exceed $300,000,000 (including direct purchases), the Secretary shall prohibit, for such financial institution, any new employment contract with a senior executive officer that provides a golden parachute in the event of an involuntary termination, bankruptcy filing, insolvency, or receivership. The Secretary shall issue guidance to carry out this paragraph not later than 2 months after October 3, 2008, and such guidance shall be effective upon issuance.
(d) Sunset 
The provisions of subsection (c) shall apply only to arrangements entered into during the period during which the authorities under section 5211 (a) of this title are in effect, as determined under section 5230 of this title.
[1] See References in Text note below.