United States regulators to release bank pay proposals soon
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