S T A T E O F N E W Y O R K
________________________________________________________________________
5309
2015-2016 Regular Sessions
I N S E N A T E
May 13, 2015
___________
Introduced by Sen. MARCELLINO -- read twice and ordered printed, and
when printed to be committed to the Committee on Investigations and
Government Operations
AN ACT to amend the executive law and the not-for-profit corporation
law, in relation to compensation of executives of certain not-for-pro-
fit corporations
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. Section 63 of the executive law is amended by adding a new
2 subdivision 14 to read as follows:
3 14. PROSECUTE ALL ACTIONS IN CONNECTION WITH SECTIONS SEVEN HUNDRED
4 TWENTY-SEVEN AND SEVEN HUNDRED TWENTY-EIGHT OF THE NOT-FOR-PROFIT CORPO-
5 RATION LAW.
6 S 2. Subparagraph 12 of paragraph (a) of section 202 of the not-for-
7 profit corporation law is amended to read as follows:
8 (12) To elect or appoint officers, employees and other agents of the
9 corporation, define their duties, fix their reasonable compensation and
10 the reasonable compensation of directors, and to indemnify corporate
11 personnel. Such compensation shall be commensurate with services
12 performed, AND SUBJECT, WHERE APPLICABLE, TO SECTION SEVEN HUNDRED TWEN-
13 TY-SEVEN (COMPENSATION OF EXECUTIVES).
14 S 3. Paragraph (a) of section 717 of the not-for-profit corporation
15 law, as amended by chapter 490 of the laws of 2010, is amended to read
16 as follows:
17 (a) Directors and officers shall discharge the duties of their respec-
18 tive positions in good faith and with the care an ordinarily prudent
19 person in a like position would exercise under similar circumstances.
20 The factors set forth in subparagraph one of paragraph (e) of section
21 552 (Standard of conduct in managing and investing an institutional
22 fund), if relevant, must be considered by a governing board delegating
23 investment management of institutional funds pursuant to section 514
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD11032-01-5
S. 5309 2
1 (Delegation of investment management). For purposes of this paragraph,
2 the term institutional fund is defined in section 551 (Definitions).
3 FURTHERMORE, ANY COMPENSATION PROVIDED TO DIRECTORS, OFFICERS, EMPLOYEES
4 AND OTHER AGENTS OF THE CORPORATION SHALL BE REASONABLE AND, WHERE
5 APPLICABLE, IS SUBJECT TO SECTION 727 (COMPENSATION OF EXECUTIVES).
6 S 4. Paragraph (a) of section 719 of the not-for-profit corporation
7 law is amended by adding a new subparagraph 6 to read as follows:
8 (6) THE PROVISION OF EXCESSIVE COMPENSATION TO DIRECTORS, OFFICERS,
9 EMPLOYEES AND OTHER AGENTS OF THE CORPORATION IN VIOLATION OF SECTION
10 727 (COMPENSATION OF EXECUTIVES), WHERE APPLICABLE.
11 S 5. Paragraph (d) of section 719 of the not-for-profit corporation
12 law is amended by adding a new subparagraph 6 to read as follows:
13 (6) UPON REIMBURSEMENT TO THE CORPORATION OF THE AMOUNT OF ANY EXCES-
14 SIVE COMPENSATION PROVIDED IN VIOLATION OF SECTION 727 (COMPENSATION OF
15 EXECUTIVES), TO BE SUBROGATED TO THE RIGHTS OF THE CORPORATION AGAINST A
16 DIRECTOR, OFFICER, EMPLOYEE OR OTHER AGENT WHO RECEIVED THE EXCESSIVE
17 COMPENSATION.
18 S 6. Clauses (A) and (B) of subparagraph 1 of paragraph (a) of section
19 720 of the not-for-profit corporation law, as amended by chapter 549 of
20 the laws of 2013, are amended to read as follows:
21 (A) The neglect of, [or] THE failure to perform, or ANY other
22 violation of his OR HER duties in the management and disposition of
23 corporate assets committed to his OR HER charge.
24 (B) The acquisition by himself OR HERSELF, transfer to others, loss or
25 waste of corporate assets due to any neglect of, [or] THE failure to
26 perform, or ANY other violation of his OR HER duties, INCLUDING
27 VIOLATIONS OF SECTION 727 (COMPENSATION OF EXECUTIVES), PURSUANT TO
28 SECTION 717 (DUTY OF DIRECTORS AND OFFICERS).
29 S 7. The not-for-profit corporation law is amended by adding a new
30 section 727 to read as follows:
31 S 727. COMPENSATION OF EXECUTIVES.
32 (A) DEFINITIONS. FOR THE PURPOSES OF THIS SECTION, UNLESS OTHERWISE
33 EXPRESSLY STATED OR CONTEXT CLEARLY REQUIRES:
34 (1) "COMPENSATION" MEANS THE AGGREGATE VALUE OF ECONOMIC BENEFITS
35 CONFERRED IN EXCHANGE FOR THE PERFORMANCE OF SERVICES THAT ARE INCLUDED
36 FOR PURPOSES OF DETERMINING REASONABLENESS UNDER SECTION 26 U.S.C. 4958,
37 AS FURTHER SPECIFIED IN 26 CFR S53.4958-4(B)(II)(B), OR SUCCEEDING
38 PROVISIONS.
39 (2) "EXECUTIVE" MEANS ANY PERSON WHO HAS ULTIMATE RESPONSIBILITY FOR
40 IMPLEMENTING THE DECISIONS OF THE GOVERNING BODY OR FOR SUPERVISING THE
41 MANAGEMENT, ADMINISTRATION, OR OPERATION OF THE ORGANIZATION, AS REFER-
42 ENCED IN 26 U.S.C. S4958(F)(1)(A) AND FURTHER SPECIFIED IN 26 CFR
43 S53.4958-3(C)(2), OR SUCCEEDING PROVISIONS.
44 (3) "FAMILY MEMBER" MEANS A SPOUSE, SIBLING (BY WHOLE OR HALF BLOOD),
45 SPOUSE OF A SIBLING (BY WHOLE OR HALF BLOOD), PARENT, GRANDPARENT,
46 CHILD, GRANDCHILD, GREAT-GRANDCHILD, AND SPOUSE OF A CHILD, GRANDCHILD,
47 AND GREAT-GRANDCHILD.
48 (B) COMPENSATION EXCHANGED BY A NOT-FOR-PROFIT CORPORATION FOR THE
49 PERFORMANCE OF SERVICES BY AN EXECUTIVE MUST BE REASONABLE CONSIDERING
50 FACTORS INCLUDING, BUT NOT LIMITED TO: COMPENSATION LEVELS PAID BY SIMI-
51 LARLY SITUATED ORGANIZATIONS, WHETHER OR NOT THEY QUALIFY AS A NOT-FOR-
52 PROFIT CORPORATION AS DEFINED IN SECTION 102 (DEFINITIONS); THE AVAIL-
53 ABILITY OF SIMILAR SERVICES IN THE GEOGRAPHIC AREA OF THE APPLICABLE
54 PROVIDER OF SERVICES; CURRENT COMPENSATION SURVEYS COMPILED BY INDEPEND-
55 ENT OUTSIDE CONSULTANTS OR ENTITIES; AND ACTUAL WRITTEN OFFERS FROM
S. 5309 3
1 SIMILAR INSTITUTIONS COMPETING FOR THE SERVICES OF THE APPLICABLE EXECU-
2 TIVE.
3 (1) FOR THE PURPOSES OF THIS SECTION, WHETHER AN ORGANIZATION IS SIMI-
4 LARLY SITUATED SHALL BE DETERMINED BASED ON FACTORS INCLUDING, BUT NOT
5 LIMITED TO: GROSS ANNUAL REVENUE; GEOGRAPHIC LOCATION; AND THE DIVERSI-
6 TY AND COMPLEXITY OF PROGRAMS.
7 (2)(A) IF A NOT-FOR-PROFIT CORPORATION RECEIVES OVER TWENTY-FIVE THOU-
8 SAND DOLLARS FROM THE STATE, THE NOT-FOR-PROFIT CORPORATION MUST ANNUAL-
9 LY SUBMIT A COMPLETED INTERNAL REVENUE SERVICE FORM 990, OR A COMPARABLE
10 FORM DEVELOPED PURSUANT TO SUBCLAUSE (I) OF CLAUSE (B) OF THIS SUBPARA-
11 GRAPH, TO THE STATE AND FILED WITH THE ATTORNEY GENERAL. SUCH COMPLETED
12 FORM OR INTERNAL REVENUE SERVICE FORM 990 SHALL BE PUBLICLY AVAILABLE
13 UPON REQUEST AND IF THE ORGANIZATION MAINTAINS A WEBSITE, IT SHALL BE
14 POSTED ON THE ORGANIZATION'S WEBSITE.
15 (B) THE COMMISSIONERS OF DEVELOPMENTAL DISABILITIES, MENTAL HEALTH,
16 ALCOHOLISM AND SUBSTANCE ABUSE SERVICES, CHILDREN AND FAMILY SERVICES,
17 HEALTH, CRIMINAL JUSTICE SERVICES AND THE DIRECTOR OF THE OFFICE FOR THE
18 AGING SHALL JOINTLY:
19 (I) DEVELOP A FORM FOR USE BY THOSE NOT-FOR-PROFIT CORPORATIONS WHO
20 ARE NOT REQUIRED BY FEDERAL LAW TO COMPLETE AN INTERNAL REVENUE SERVICE
21 FORM 990. SUCH FORM SHALL REQUIRE NO MORE INFORMATION THAN THAT WHICH
22 MUST BE SUBMITTED ON INTERNAL REVENUE SERVICE FORM 990;
23 (II) PROMULGATE REGULATIONS THAT ALLOW A NOT-FOR-PROFIT CORPORATION TO
24 SUBMIT ONE COMPLETED INTERNAL REVENUE SERVICE FORM 990, OR ONE COMPLETED
25 COMPARABLE FORM, THROUGH THE POSTAL SERVICE OR ELECTRONICALLY, FOR
26 DISTRIBUTION TO ALL AGENCIES THAT PROVIDE FUNDING TO THE NOT-FOR-PROFIT
27 CORPORATION; AND
28 (III) ESTABLISH UNIFORM PROCEDURES FOR REVIEWING SUBMITTED FORMS; AND,
29 UPON A DETERMINATION THAT EXECUTIVE COMPENSATION APPEARS TO BE EXCESSIVE
30 IN VIOLATION OF THE STANDARDS ESTABLISHED IN THIS SECTION, FOR REFERRING
31 SUCH CASES TO THE ATTORNEY GENERAL FOR FURTHER INQUIRY.
32 (C) ANNUAL COMPENSATION EXCHANGED BY A NOT-FOR-PROFIT CORPORATION FOR
33 THE PERFORMANCE OF SERVICES BY AN EXECUTIVE SHALL BE CONSIDERED REASON-
34 ABLE IF IT DOES NOT EXCEED LEVEL I OF THE FEDERAL GOVERNMENT'S RATES OF
35 BASIC PAY FOR THE EXECUTIVE SCHEDULE PROMULGATED BY THE UNITED STATES
36 OFFICE OF PERSONNEL MANAGEMENT.
37 (D) ANNUAL COMPENSATION EXCHANGED BY A NOT-FOR-PROFIT CORPORATION FOR
38 THE PERFORMANCE OF SERVICES BY AN EXECUTIVE THAT DOES EXCEED LEVEL I OF
39 THE FEDERAL GOVERNMENT'S RATES OF BASIC PAY FOR THE EXECUTIVE SCHEDULE
40 SHALL BE PRESUMED TO BE REASONABLE IF THE FOLLOWING FOUR CONDITIONS ARE
41 SATISFIED:
42 (1) THE COMPENSATION IS APPROVED IN ADVANCE BY THE GOVERNING BODY
43 (I.E., THE BOARD OF DIRECTORS, BOARD OF TRUSTEES, OR EQUIVALENT CONTROL-
44 LING BODY) OF THE NOT-FOR-PROFIT CORPORATION THAT IS COMPOSED ENTIRELY
45 OF INDIVIDUALS WHO DO NOT HAVE A CONFLICT OF INTEREST WITH RESPECT TO
46 THE COMPENSATION ARRANGEMENT.
47 (A) FOR THE PURPOSES OF DETERMINING WHETHER THE REQUIREMENTS OF THIS
48 PARAGRAPH HAVE BEEN MET WITH RESPECT TO A SPECIFIC COMPENSATION ARRANGE-
49 MENT, AN INDIVIDUAL IS NOT INCLUDED IN THE GOVERNING BODY WHEN IT IS
50 REVIEWING A TRANSACTION IF THAT INDIVIDUAL MEETS WITH OTHER MEMBERS ONLY
51 TO ANSWER QUESTIONS, AND OTHERWISE RECUSES HIMSELF OR HERSELF FROM THE
52 MEETING AND IS NOT PRESENT DURING DEBATE AND VOTING ON THE COMPENSATION
53 ARRANGEMENT.
54 (B) A MEMBER OF THE GOVERNING BODY DOES NOT HAVE A CONFLICT OF INTER-
55 EST WITH RESPECT TO A COMPENSATION ARRANGEMENT ONLY IF THE MEMBER:
S. 5309 4
1 (I) IS NOT AN EXECUTIVE PARTICIPATING IN, OR ECONOMICALLY BENEFITING
2 FROM, THE COMPENSATION ARRANGEMENT; AND IS NOT A FAMILY MEMBER OF SUCH
3 AN EXECUTIVE;
4 (II) IS NOT IN AN EMPLOYMENT RELATIONSHIP SUBJECT TO THE DIRECTION OR
5 CONTROL OF ANY EXECUTIVE, OR THE FAMILY MEMBER OF ANY EXECUTIVE, PARTIC-
6 IPATING IN OR ECONOMICALLY BENEFITING FROM THE COMPENSATION ARRANGEMENT;
7 (III) DOES NOT RECEIVE COMPENSATION OR OTHER PAYMENT SUBJECT TO
8 APPROVAL BY ANY EXECUTIVE, OR THE FAMILY MEMBER OF ANY EXECUTIVE,
9 PARTICIPATING IN OR ECONOMICALLY BENEFITING FROM THE COMPENSATION
10 ARRANGEMENT;
11 (IV) HAS NO MATERIAL FINANCIAL INTEREST AFFECTED BY THE COMPENSATION
12 ARRANGEMENT; AND
13 (V) DOES NOT APPROVE A TRANSACTION PROVIDING ECONOMIC BENEFITS TO ANY
14 EXECUTIVE, OR THE FAMILY MEMBER OF ANY EXECUTIVE, PARTICIPATING IN THE
15 COMPENSATION ARRANGEMENT, WHO IN TURN HAS APPROVED OR WILL APPROVE A
16 TRANSACTION PROVIDING ECONOMIC BENEFITS TO THE MEMBER.
17 (2) THE GOVERNING BODY OBTAINED AND RELIED UPON APPROPRIATE DATA AS TO
18 COMPARABILITY PRIOR TO MAKING ITS DETERMINATION.
19 (A) A GOVERNING BODY HAS APPROPRIATE DATA AS TO COMPARABILITY IF,
20 GIVEN THE KNOWLEDGE AND EXPERTISE OF ITS MEMBERS, IT HAS INFORMATION
21 SUFFICIENT TO DETERMINE WHETHER THE COMPENSATION ARRANGEMENT IN ITS
22 ENTIRETY IS REASONABLE. RELEVANT INFORMATION INCLUDES, BUT IS NOT LIMIT-
23 ED TO: COMPENSATION LEVELS PAID BY SIMILARLY SITUATED ORGANIZATIONS,
24 WHETHER OR NOT THEY QUALIFY AS A NOT-FOR-PROFIT CORPORATION AS DEFINED
25 IN SECTION 102 (DEFINITIONS); THE AVAILABILITY OF SIMILAR SERVICES IN
26 THE GEOGRAPHIC AREA OF THE APPLICABLE PROVIDER OF SERVICES; CURRENT
27 COMPENSATION SURVEYS COMPILED BY INDEPENDENT FIRMS; AND ACTUAL WRITTEN
28 OFFERS FROM SIMILAR INSTITUTIONS COMPETING FOR THE SERVICES OF THE
29 APPLICABLE EXECUTIVE.
30 (B) HOWEVER, FOR SMALL ORGANIZATIONS WITH ANNUAL GROSS RECEIPTS
31 (INCLUDING CONTRIBUTIONS) OF LESS THAN ONE MILLION DOLLARS REVIEWING
32 COMPENSATION ARRANGEMENTS, THE GOVERNING BODY WILL BE CONSIDERED TO HAVE
33 APPROPRIATE DATA AS TO COMPARABILITY IF IT HAS DATA ON COMPENSATION PAID
34 BY THREE COMPARABLE PROVIDERS OF SERVICES IN THE SAME OR SIMILAR COMMU-
35 NITIES FOR SIMILAR SERVICES.
36 (I) FOR THE PURPOSES OF DETERMINING WHETHER THE ABOVE RULE FOR SMALL
37 ORGANIZATIONS APPLIES, AN ORGANIZATION MAY CALCULATE ITS ANNUAL GROSS
38 RECEIPTS BASED ON AN AVERAGE OF ITS GROSS RECEIPTS DURING THE THREE
39 PRIOR TAXABLE YEARS. IF ANY APPLICABLE NOT-FOR-PROFIT CORPORATION IS
40 CONTROLLED BY OR CONTROLS ANOTHER ENTITY, THE ANNUAL GROSS RECEIPTS OF
41 SUCH ORGANIZATIONS MUST BE AGGREGATED TO DETERMINE APPLICABILITY.
42 (II) FOR PURPOSES OF THIS PARAGRAPH, CONTROL BY AN APPLICABLE
43 NOT-FOR-PROFIT CORPORATION MEANS:
44 1. IN THE CASE OF A STOCK CORPORATION, OWNERSHIP (BY VOTE OR VALUE) OF
45 MORE THAN FIFTY PERCENT OF THE STOCK IN SUCH CORPORATION;
46 2. IN THE CASE OF A PARTNERSHIP, OWNERSHIP OF MORE THAN FIFTY PERCENT
47 OF THE PROFITS INTERESTS OR CAPITAL INTERESTS IN THE PARTNERSHIP;
48 3. IN THE CASE OF A NONSTOCK ORGANIZATION (I.E., AN ENTITY IN WHICH NO
49 PERSON HOLDS A PROPRIETARY INTEREST), THAT AT LEAST FIFTY PERCENT OF THE
50 DIRECTORS OR TRUSTEES OF THE NOT-FOR-PROFIT CORPORATION ARE EITHER
51 REPRESENTATIVES (INCLUDING TRUSTEES, DIRECTORS, AGENTS, OR EMPLOYEES)
52 OF, OR DIRECTLY OR INDIRECTLY CONTROLLED BY, AN APPLICABLE TAX-EXEMPT
53 ORGANIZATION; OR
54 4. IN THE CASE OF ANY OTHER ENTITY, OWNERSHIP OF MORE THAN FIFTY
55 PERCENT OF THE BENEFICIAL INTEREST IN THE ENTITY.
S. 5309 5
1 (3) THE GOVERNING BODY ADEQUATELY DOCUMENTED THE BASIS FOR ITS DETER-
2 MINATION CONCURRENTLY WITH MAKING THAT DETERMINATION.
3 (A) FOR A DECISION TO BE DOCUMENTED ADEQUATELY, THE WRITTEN OR ELEC-
4 TRONIC RECORDS OF THE GOVERNING BODY MUST NOTE:
5 (I) THE TERMS OF THE TRANSACTION THAT WAS APPROVED, AND THE DATE IT
6 WAS APPROVED;
7 (II) THE MEMBERS OF THE GOVERNING BODY WHO WERE PRESENT DURING DEBATE
8 ON THE TRANSACTION THAT WAS APPROVED, AND THOSE WHO VOTED ON IT;
9 (III) THE COMPARABILITY DATA OBTAINED AND RELIED UPON BY THE GOVERNING
10 BODY, AND HOW THE DATA WAS OBTAINED; AND
11 (IV) ANY ACTIONS TAKEN WITH RESPECT TO CONSIDERATION OF THE TRANS-
12 ACTION BY ANYONE WHO IS OTHERWISE A MEMBER OF THE GOVERNING BODY BUT WHO
13 HAD A CONFLICT OF INTEREST WITH RESPECT TO THE TRANSACTION.
14 (B) IF THE GOVERNING BODY DETERMINES THAT REASONABLE COMPENSATION FOR
15 A SPECIFIC ARRANGEMENT IS HIGHER OR LOWER THAN THE RANGE OF COMPARABILI-
16 TY DATA OBTAINED, THE GOVERNING BODY MUST RECORD THE BASIS FOR ITS
17 DETERMINATION. FOR A DECISION TO BE DOCUMENTED CONCURRENTLY, RECORDS
18 MUST BE PREPARED BEFORE THE LATER OF THE NEXT MEETING OF THE GOVERNING
19 BODY OR SIXTY DAYS AFTER THE FINAL ACTION OR ACTIONS OF THE GOVERNING
20 BODY ARE TAKEN. RECORDS MUST BE REVIEWED AND APPROVED BY THE GOVERNING
21 BODY AS REASONABLE, ACCURATE AND COMPLETE WITHIN A REASONABLE TIME PERI-
22 OD THEREAFTER.
23 (4) THE COMPENSATION PROVIDED TO THE EXECUTIVE BY THE GOVERNING BODY
24 DOES NOT EXCEED THE HIGHEST COMPENSATION PROVIDED BY A SIMILARLY SITU-
25 ATED ORGANIZATION FOR SIMILAR SERVICES, AS IDENTIFIED IN THE COMPARABIL-
26 ITY DATA, BY MORE THAN TEN PERCENT.
27 (E) IF THE FOUR CONDITIONS OF PARAGRAPH (D) OF THIS SECTION ARE SATIS-
28 FIED, THEN THE PERSON OR ENTITY BRINGING AN ACTION FOR RELIEF PURSUANT
29 TO SECTION 720 (ACTIONS AGAINST DIRECTORS, OFFICERS AND KEY EMPLOYEES)
30 MAY REBUT THE PRESUMPTION THAT ARISES UNDER PARAGRAPH (D) OF THIS
31 SECTION ONLY IF IT DEVELOPS SUFFICIENT CONTRARY EVIDENCE TO REBUT THE
32 PROBATIVE VALUE OF THE COMPARABILITY DATA RELIED UPON BY THE GOVERNING
33 BODY. WITH RESPECT TO ANY FIXED PAYMENT, REBUTTAL EVIDENCE IS LIMITED TO
34 EVIDENCE RELATING TO FACTS AND CIRCUMSTANCES EXISTING ON THE DATE THE
35 PARTIES ENTER INTO THE CONTRACT PURSUANT TO WHICH THE PAYMENT IS MADE
36 (EXCEPT IN THE EVENT OF SUBSTANTIAL NONPERFORMANCE). WITH RESPECT TO ALL
37 OTHER PAYMENTS, REBUTTAL EVIDENCE MAY INCLUDE FACTS AND CIRCUMSTANCES UP
38 TO AND INCLUDING THE DATE OF PAYMENT.
39 (F) A NOT-FOR-PROFIT CORPORATION IS PROHIBITED FROM: (1) ENGAGING IN
40 ANY ACT THAT THE INTERNAL REVENUE SERVICE DETERMINES CONSTITUTES AN
41 "EXCESS BENEFIT TRANSACTION" UNDER SECTION 4958 OF THE INTERNAL REVENUE
42 CODE; OR (2) ENGAGING IN ANY ACT THAT WOULD CONSTITUTE AN "EXCESS BENE-
43 FIT TRANSACTION" UNDER THE STANDARDS OF SECTION 4958 OF THE INTERNAL
44 REVENUE CODE.
45 S 8. The not-for-profit corporation law is amended by adding a new
46 section 728 to read as follows:
47 S 728. WRITTEN POLICY REQUIRED.
48 (A) THE GOVERNING BODY OF A NOT-FOR-PROFIT CORPORATION SHALL HAVE A
49 WRITTEN POLICY ON:
50 (1) EMPLOYEES SERVING ON SUCH GOVERNING BODY, THEIR VOTING RIGHTS,
51 RECUSAL FROM DECISIONS OF THE GOVERNING BODY, AND THE PERCENTAGE OF THE
52 MEMBERSHIP OF THE GOVERNING BODY THAT MUST BE INDEPENDENT OF THE ORGAN-
53 IZATION;
54 (2) HIRING OF FAMILY MEMBERS OF EMPLOYEES AND GOVERNING BODY MEMBERS;
55 AND
56 (3) CONFLICT OF INTEREST COVERING BUSINESS INTERESTS.
S. 5309 6
1 (B) EMPLOYEES OF A NOT-FOR-PROFIT CORPORATION ARE PROHIBITED FROM:
2 (1) SERVING AS THE CHAIR OF SUCH ORGANIZATION'S GOVERNING BODY; AND
3 (2) SERVING AS A VOTING MEMBER OF SUCH ORGANIZATION'S GOVERNING BODY.
4 (C) NO PERSON WHO IS RELATED TO ANY EXECUTIVE AS DEFINED IN SUBPARA-
5 GRAPH TWO OF PARAGRAPH (A) OF SECTION 727 (COMPENSATION OF EXECUTIVES)
6 OR ANY MEMBER OF A GOVERNING BODY BY BLOOD OR MARRIAGE SHALL BE EMPLOYED
7 BY SUCH ORGANIZATION, EXCEPT WITH THE APPROVAL OF TWO-THIRDS OF THE
8 MEMBERS OF THE GOVERNING BODY.
9 (D) ALL WRITTEN POLICIES REQUIRED IN PARAGRAPH (A) OF THIS SECTION
10 SHALL BE AVAILABLE FOR REVIEW BY THE ATTORNEY GENERAL UPON REQUEST.
11 S 9. This act shall take effect on the one hundred eightieth day after
12 it shall have become a law; provided, however, that the commissioners of
13 the offices for people with developmental disabilities, mental health,
14 alcoholism and substance abuse services, children and family services,
15 health, criminal justice services and the director of the office for the
16 aging shall immediately take the necessary actions to ensure that forms
17 and regulations required by section seven of this act are in place on
18 such effective date; and provided, further, whereas the authority to
19 promulgate regulations and make rules is derived from an express or
20 implicit statutory grant provided by the legislature, all agencies,
21 divisions and departments of the state are hereby prohibited from
22 promulgating regulations and making rules pursuant to section 8.38 of
23 title 9 of the official compilation of the New York Codes, Rules and
24 Regulations, or that otherwise address the extent and nature of a
25 provider's administrative costs and executive compensation, except as
26 required and necessary to implement the provisions of section six of
27 this act.