United States reg­u­la­tors to re­lease bank pay pro­pos­als soon

The Pak Banker - - Company& -

WASHINGTON: US reg­u­la­tors, in­clud­ing the Fed­eral Re­serve, plan to re­lease pro­posed rules on bank com­pen­sa­tion prac­tices as soon as next month, ac­cord­ing to a per­son fa­mil­iar with the plans.

Fed­eral of­fi­cials are dis­cussing re­quir­ing banks to use de­ferred com­pen­sa­tion for a por­tion of ex­ec­u­tive pay so as to curb ex­ces­sive risk-tak­ing, said the per­son, who de­clined to be iden­ti­fied be­cause the talks are pri­vate and the spe­cific pro­pos­als haven't been agreed upon. The com­pen­sa­tion re­stric­tions may be pro­por­tional to the size of the firms, the per­son said.

The Dodd-Frank leg­is­la­tion, which Pres­i­dent Barack Obama signed into law in July, re­quires fed­eral reg­u­la­tors to pro­pose joint rule­mak­ing that pro­hibits any com­pen­sa­tion struc­ture that "en­cour­ages in­ap­pro­pri­ate risks." The Fed, Se­cu­ri­ties and Ex­change Com­mis­sion and five other fed­eral agen­cies are re­quired to com­plete the rules by April.

The pro­pos­als will fol­low com­pen­sa­tion guide­lines is­sued by the Fed and three other reg­u­la­tors in June. They said a re­view of pay prac­tices found many big banks to be "de­fi­cient" in cur­tail­ing the risk-tak­ing that fu­eled the worst fi­nan­cial cri­sis since the Great De­pres­sion.

The Fed re­view said a "sub­stan­tial por­tion" of in­cen­tive pay for se­nior ex­ec­u­tives at large banks should be de­ferred more than a year, with pay­ment de­pen­dent on the com­pany's and in­di­vid­ual's per­for­mance.

Still, de­ferred pay might not be enough if the ex­ec­u­tives are in a po­si­tion to ex­pose the com­pany to longterm risks, the Fed said in a June 21 state­ment. Banks there­fore should use a va­ri­ety of meth­ods in award­ing in­cen­tive com­pen­sa­tion, in­clud­ing ad­just­ing the links be­tween pay and risk-tak­ing, ac­cord­ing to the cen­tral bank.

Robert Gars­son, spokesman for the Of­fice of the Comptroller of the Cur­rency, de­clined to com­ment on the ex­ec­u­tive com­pen­sa­tion rule­mak­ing. The Wall Street Jour­nal ear­lier re­ported that the reg­u­la­tors may re­lease ex­ec­u­tive pay pro­pos­als next month.

Trea­sury Sec­re­tary Ti­mothy F. Gei­th­ner said last week that U.S. com­pa­nies haven't done enough to im­prove their ex­ec­u­tive-pay prac­tices since the 2008 fi­nan­cial cri­sis.

Gold­man Sachs Group Inc.'s top ex­ec­u­tives will get about $111.3 mil­lion in stock next month in a de­layed pay­out from last year and their record-set­ting 2007 awards.

Gold­man's Chief Ex­ec­u­tive Of­fi­cer Lloyd C. Blank­fein and Pres­i­dent Gary D. Cohn are both poised to re­ceive about $24 mil­lion, based on the Dec. 14 clos­ing price, com­pany fil­ings show. The pay­outs are a por­tion of the $67.9 mil­lion bonus awarded to Blank­fein for 2007 and the $66.9 mil­lion paid to Cohn.

David Wells, a spokesman for New York-based Gold­man, de­clined to com­ment.

Bonuses across Wall Street are ex­pected to de­cline this year. -PB News

CAL­I­FOR­NIA: Ap­ple CEO Steve Jobs looks at a dis­play of the new MacBook Air at the com­pany's head­quar­ters in Cu­per­tino. -Ap

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