The Senate COVID-19 economic stimulus package includes a provision that could affect life insurance professionals who handle executive compensation and executive benefits arrangements.
Members of the Senate passed the “Coronavirus Aid, Relief, and Economic Security Act” bill, which is packaged as an amendment to H.R. 748, by a 96-0 vote late Wednesday.
- A copy of the legislation the Senate approved is available here.
- An article about the legislation is available here.
The main goal of the bill is to rush $2.2 trillion in aid to people, businesses and communities hit hard by the COVID-19 pandemic.
To become law, the bill still must still pass in the House and get the signature of President Donald Trump.
Some lawmakers have objected to the idea of companies that receive COVID-19 emergency loans, or loan guarantees, using the money to make shareholders richer, by buying back shares of stock, or to increase the executives’ pay.
Section 4004 of H.R. 748 addresses that concern by imposing a “limitation of certain employee compensation.”
The section affects businesses that receive loans or loan guarantees through H.R. 748 emergency business aid programs.
The section imposes one set of restrictions for an officer or employee of an eligible business who made more than $425,000 in 2019, and another set for an officer of employee who made more than $3 million in 2019.
If an officer or employee at an aid recipient company made more than $425,000 in total compensation in 2019, then that officer or employee cannot earn more total compensation in the 12-month period after the emergency aid is received than in 2019, according to the text of Section 4004.