WASHINGTON — After years of delay, regulators are finally slated next week to take up a reworked proposal that would restrict how banks and credit unions pay executives.
The National Credit Union Administration quietly announced late Thursday that it would hold a hearing to discuss the proposal on April 21.
The plan is a multiagency regulation spanning the NCUA, the Federal Reserve, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency, Securities and Exchange Commission and the Federal Housing Finance Agency. The other agencies have not yet announced when they will vote to release the proposal, but joint rulemakings are generally taken up by all relevant agencies on the same day or within days of each other.
The plan is among the highest-profile regulation left undone since the passage of the Dodd-Frank Act, and President Obama himself expressed the pressing need for it to be completed in a joint meeting with regulators held at the White House last month.
Executive compensation was one of the leading sources of public resentment after the financial crisis when it was revealed that executives and their underlings were essentially incentivized to take excessive risks without any appropriate attention paid to the financial stability of their firms.
The agencies released a plan in 2011, but it was strongly opposed by the industry and the subject of fierce debate among the regulators themselves. The plan to be released next week is a reproposal that attempts to address the perceived flaws of the earlier effort. Industry representatives widely expect it to be hundreds of pages long.
Since the crisis, other sections of the law have been completed, including a "say on pay" rule by the SEC that requires shareholder disclosure of executive compensation packages and the widespread adoption of "clawbacks" in packages, whereby the board of a firm can take back compensation later if it is revealed to have been awarded based on fraudulent or misleading performance.