Regulatory & Compliance | 05.08.24
U.S. Regulators Revive Incentive Pay Proposals
by: James Langton
The U.S. Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency and Federal Housing Finance Agency issued a rule-making proposal that addresses incentive-based compensation arrangements in the financial sector. The proposal revives rules that were initially published in 2016 under the Dodd-Frank Act, which required federal regulators to adopt rules or guidance regarding incentive-based compensation practices at financial institutions with at least $1 billion in assets. The latest proposals include prohibitions designed to make incentive-based compensation arrangements more sensitive to risk, including prohibitions on incentive plans that do not include clawback and forfeiture provisions. The proposed rules also include disclosure and record-keeping requirements that are intended to improve regulators’ oversight in this area. The agencies noted that the U.S. Securities and Exchange Commission also has this issue on its rule-making agenda, and that the National Credit Union Administration is expected to take action on it in the near future too.
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