Sullivan & Cromwell LLP
05/13/2024 | Press release | Distributed by Public on 05/14/2024 10:24
Agencies to Consider Variety of Restrictive Alternatives as Part of Incentive Compensation Rule Re-Proposal
May 13, 2024
Including:
- Subjecting all Covered Institutions with More than $50 Billion of Assets to the Most Restrictive Provisions
- Eliminating Board Discretion with Respect to Forfeiture, Downward Adjustment, and Clawback
On May 6, 2024, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Federal Housing Finance Agency re-proposed their joint rule to implement Section 956 of the Dodd-Frank Act, which requires federal financial regulators to prohibit, at any financial institution with consolidated assets of at least $1 billion, incentive-based compensation that encourages inappropriate risks. The re-proposed rule is the same as the agencies proposed in 2016, but is accompanied by alternative regulatory provisions that reflect the agencies' thinking since that time and are potentially much more stringent than the proposed rule. This memorandum summarizes these potential alternatives.