08 Mar. 2011 | Comments (0)
- Disclosures about incentive-based compensation arrangements: A covered institution would have to file annually a report describing the bonus arrangements, including a narrative of the components, a description of the firm’s policies governing those arrangements and a statement as to why the firm believes the structure of the plan will prevent it from suffering a material financial loss. (Sort of like a CD&A for bonus plans.)
- Prohibition on encouraging inappropriate risk: A covered financial institution would be prohibited from starting or keeping an incentive-based compensation plan that encourages inappropriate risks by providing covered persons (executive officers, employees, directors or principal shareholders) with excessive compensation.
- Establishing policies and procedures: A covered financial institution would be barred from establishing an incentive-based compensation plan unless it was approved under policies and procedures approved by the institution and its board.