HBA-NIK S.B. 1657 76(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 1657 By: Jackson Insurance 4/13/1999 Engrossed BACKGROUND AND PURPOSE Currently, boards of directors of domestic insurance companies must annually approve employee compensation which exceeds $50,000 per year. Due to salary increases, the number of people covered under this restriction has grown significantly for many companies. Securing board approval for each employee's salary which is over the statutory limit has become a time-consuming process. S.B. 2751 prohibits a "domestic" company from paying any salary in an amount greater than $100,000 in any year to any officer, trustee, or director or to any person, firm, or corporation, unless the compensation is first authorized by the board of directors. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Subsection (a), Article 3.12, Insurance Code, as follows: (a) Increases the maximum salary, beyond which a "domestic" company is prohibited to pay any officer, trustee or director of the "domestic" company, rather than thereof, from $50,000 to $100,000 in any year. Provides an exception to such payment relating to authorization by board of directors. Provides that the limitation as to time contained in this article does not prevent a "domestic" company from entering into contracts with its agents for the payment of renewal commissions, rather than prohibiting the limitation as to time contained herein from being construed as preventing any "domestic" company from entering into such contracts. SECTION 2. Effective date: September 1, 1999. SECTION 3. Emergency clause.