Banking Agencies Issue Proposal on Incentive-Based Compensation

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https://ncua.gov/files/press-releases-news/incentive-based-compensation-arrangements.pdf

Above is the link to the 200 page proposed rule on banker's incentive compensation.

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Hello, this is Samantha Shares.

This episode covers N C U A’s press
release on U S Banking Agencies

Issuance of a proposed rule on
Incentive Based Compensation.

The following is an audio
version of that press release.

This podcast is educational
and is not legal advice.

We are sponsored by Credit Union
Exam Solutions Incorporated, whose

team has over two hundred and
Forty years of National Credit

Union Administration experience.

We assist our clients with N C
U A so they save time and money.

If you are worried about a recent,
upcoming or in process N C U A

examination, reach out to learn how they
can assist at Mark Treichel DOT COM.

Also check out our other podcast called
With Flying Colors where we provide tips

on how to achieve success with N C U A.

The rule is two hundred pages
long as a link to the full

text is in the show notes.

And now the press release.

Agencies Issue Proposal on
Incentive-Based Compensation

(May sixth , twenty twenty four) – The
Federal Deposit Insurance Corporation (F D

I C), the Office of the Comptroller of the
Currency (O C C), and the Federal Housing

Finance Agency (F H F A), have adopted
a Notice of Proposed Rulemaking (N P R)

to address incentive-based compensation
arrangements, as required under section

956 of the Dodd-Frank Wall Street Reform
and Consumer Protection Act (section 956).

The National Credit Union Administration
(N C U A) is expected to take action

on the NPR in the near future.

The U.S.

Securities and Exchange Commission (SEC)
has included a rulemaking to implement

section 956 on its rulemaking agenda.

This NPR is intended to advance
stakeholder engagement needed to develop

a final incentive-based compensation rule.

The N P R re-proposes the regulatory
text previously proposed in June

twenty sixteen, and seeks public
comment in the preamble on certain

alternatives and questions.

Section 9 5 6 requires the appropriate
Federal regulators—the F D I C, the Board

of Governors of the Federal Reserve System
(F R B), the O C C, the N C U A, the F H

F A, and the S E C—to jointly prescribe
regulations or guidelines with respect to

incentive-based compensation practices at
certain financial institutions that have

one billion dollars or more in assets.

Once the N P R is adopted by all six
agencies, it will be published in the

Federal Register with a comment period
of sixty days following publication.

Until then, each agency acting on the NPR
will make it available on their respective

website, and will accept comments.

The proposed rule includes
prohibitions intended to make

incentive-based compensation
arrangements more sensitive to risk.

These include a prohibition on
incentive-based compensation arrangements

that do not include risk adjustment
of awards, deferral of payments, and

forfeiture and clawback provisions.

The prohibitions also emphasize the
important role of sound governance and

risk management control mechanisms.

These prohibitions would help safeguard
covered institutions from the types

and features of incentive-based
compensation arrangements that

encourage inappropriate risks.

The recordkeeping and disclosure
requirements in the proposed regulatory

text would assist the appropriate
Federal regulator in monitoring

and identifying areas of potential
concern at covered institutions.

Comments received on this N P R
and those previously submitted

on the twenty sixteen N P R, will
further inform efforts to address

incentive-based compensation arrangements,
as required under section 956.

This concludes the press release.

The full rule is available
in a link in the show notes.

If your Credit union could use assistance
with your exam, reach out to Mark Treichel

on LinkedIn, or at mark Treichel dot com.

This is Samantha Shares and
we Thank you for listening.