§5641 Enhanced Compensation Structure Reporting

Summary

Not later than 9 months after July 21, 2010, certain Federal regulators must write rules that make covered financial institutions explain how their incentive pay plans are set up. The explanations must be enough for regulators to tell if a plan gives top people excessive pay or could cause a big financial loss. The regulators must also ban any kinds of incentive plans or plan features that encourage risky behavior by giving excessive pay or that could lead to material loss. The pay rules must be similar to the rules in section 1831p–1 and should take the standards in section 1831p–1(c) into account. Enforcement will be handled under section 505 of the Gramm‑Leach‑Bliley Act, and breaches will be treated as violations of subtitle A of title V of that Act. “Appropriate Federal regulator” means the listed banking and securities agencies (e.g., the Federal Reserve, OCC, FDIC, SEC, FHFA, NCUA, and the Director of OTS). “Covered financial institution” means banks and bank holding companies, broker‑dealers, credit unions, investment advisers, Fannie Mae, Freddie Mac, and others the regulators add. Institutions with less than $1,000,000,000 in assets are exempt. Reporting does not require giving each person’s actual pay, and firms without incentive plans do not have to report.