Executive compensation has been grabbing the headlines for the past couple of years, not always for the right reasons. Amid the cacophony, international standard-setting bodies and the Federal Reserve Board have been quietly but fundamentally changing how financial institutions will make compensation decisions.
Over the past 18 months, supervisors in the U.S. and abroad have been issuing compensation guidelines with increasing clarity and detail. Looming in the short horizon is the Fed's final guidance on compensation. That guidance, along with the latest Basel Committee guidelines on compensation, will provide a firm basis for U.S. supervisory expectations on compensation.