US financial regulators restart work on long-delayed compensation rules

WASHINGTON, May 6 (Reuters) – A trio of U.S. financial regulators have resumed work on a long-delayed rule-writing project to make executive compensation plans at financial firms more sensitive to risk.

The Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency and Federal Housing Finance Agency jointly proposed the rule, which would bar incentive-based plans that do not account for risks or allow pay to be clawed back or forfeited, the agencies said.

The renewed effort, which is a repeat of a 2016 proposal, marks the latest attempt in a years-long effort to adopt new rules prescribed as part of the 2010 Dodd-Frank financial reform law. The proposed rules are aimed at ensuring that leaders of financial institutions are not encouraged to take on excessive risk in a bid to boost their personal compensation.

“When poor compensation practices involve the largest financial institutions, the negative impacts of inappropriate risk-taking can have broader consequences for the financial system,” FDIC Chairman Martin Gruenberg said in a statement, noting that poor compensation practices were among issues identified in the failure of Silicon Valley Bank last year.

Source: REUTER