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New rule targets incentive-based pay at financial institutions

Joe Mont | April 21, 2016

Inching forward with one of the most-delayed—and controversial—mandates of the Dodd-Frank Act, the National Credit Union Administration has re-proposed a stalled 2011 rule proposal targeting incentive-based executive pay that encourages inappropriate risks at banks and credit unions.

The proposed rules—which also apply to investment advisers, broker-dealers, and mortgage-finance companies Fannie Mae and Freddie Mac—would impose new clawback provisions, enhance compensation-related disclosures, and require executives and “significant risk takers” to defer as much as 60 percent of their incentive-based pay for up to four years.

The rulemaking is a multi-agency effort and will include the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the Board of Governors of the Federal...

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