Incentive-Based Compensation Arrangements

SEC Release 34-64140

March 29, 2011

Pursuant to Section 956 of the Dodd-Frank Act, federal financial regulatory agencies published for comment a proposal to prohibit incentive-based payment arrangements (or any feature of such arrangements) at financial institutions determined to encourage inappropriate risks by a financial institution that could lead to material losses. The proposal would generally apply to financial institutions with more than $1 billion in assets, and would require compensation arrangements that are consistent with three principles: (1) that incentive compensation arrangements appropriately balance risk and rewards; (2) are compatible with effective controls and risk management; and (3) are supported by strong corporate governance.

Comments on the proposal are due 45 days after publication in the Federal Register.

Cross References

SEC Press Release 2011-77

Dodd-Frank § 956