Agencies Issue Proposed Regulations on Incentive-Based Compensation

In late April and early May, the National Credit Union Administration, Federal Deposit Insurance Corporation, Federal Housing Finance Agency, the Board of Governors of the Federal Reserve System, Officer of the Comptroller of the Currency, and the Securities and Exchange Commission (SEC) jointly issued proposed regulations that would impose significant requirements for the payment of incentive-based compensation by certain covered financial institutions with average total consolidated assets of at least $1 billion.  The proposed regulations were issued pursuant to Section 956 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), which prohibits covered institutions from establishing or maintaining any type of incentive-based compensation arrangement that encourages risks by providing excessive compensation or that could lead to material financial loss. The proposed regulations replace regulations originally proposed by these agencies in April