Federal Reserve Proposes Bank Executive Compensation Rule
The Federal Reserve Board is seeking comments on a proposed rule that would limit executives’ incentive-based compensation that could encourage excessive risk taking at financial institutions. The Fed will accept comments until July 22.
The Federal Reserve pay proposal would apply to banks that have at least $1 billion in assets, with the largest banks facing the strictest rules. In general, the largest banks would have to set aside a percentage of incentive-based pay for a period of time determined by the assessed risks taken by those institutions. Smaller banks would potentially face looser restrictions.
The proposed rule stems from Section 956 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Such agencies as the FDIC and National Credit Union Administration have already released their own similar proposals.