Seven federal agencies jointly published a proposed rule yesterday that would require large financial services companies to report on their incentive pay systems for executives and for financial firms to defer as much as half of bankers' bonuses for at least three years.

Comments will be accepted for 45 days after the proposal is published in the Federal Register, which is expected soon, according to the agencies.

The 207 page release was issued, as required by Section 956 of the Dodd-Frank Act, by Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of Thrift Supervision, Treasury, National Credit Union Administration, Securities and Exchange Commission, and Federal Housing Finance Agency.

“These rules are identical to those published by the FDIC, except they pertain to investment advisers and broker dealers, over whom the SEC has authority to regulate,” says Steven Seelig, executive compensation counsel at consulting firm Towers Watson. 

"The substance of the proposed rules have not changed," says Mary Mullany, a partner at law firm Ballard Spahr.

The proposed rule would require the firms to report their incentive pay systems and to ensure that they do not allow excessive pay to expose the institution to “inappropriate risks.” The rule would apply to institutions governed by the Federal banking agencies and the SEC with assets of $50 billion or more, to firms regulated by the NCUA with $10 billion or more, and for the FHFA, all Federal Home Loan Banks with a $1 billion threshold.

Financial institutions with $50 billion or more in total consolidated assets are required to defer at least 50 percent of the incentive pay of executive officers for at least three years.

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