The federal government’s extraordinary multi-pronged attack against
executive compensation practices took another step forward, this time
with the Federal Reserve Board of Governors (“FRB”) taking aim. On
October 22, 2009, the FRB proposed new guidance that will dramatically
affect incentive compensation arrangements for the banking industry.
The proposed guidance is consistent with and largely patterned after
the multi-national Financial Stability Board’s September 25, 2009
report titled “FSB Principles for Sound Compensation Practices.” Not to
be left out of the headlines, on the same day, the Special Master for
the government’s Troubled Asset Relief Program (“TARP”) Executive
Compensation also announced significant reductions in compensation for
the top executives and employees at companies receiving exceptional
TARP assistance along with various other mandated reforms to
compensation practices.
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