Balancing the Risks and Rewards of Incentive Compensation:
With the goal of promoting incentive compensation structures that promote the safety and soundness of the banking industry, the Board of Governors of the Federal Reserve System,the FDIC, the OCC and the OTS (the “Agencies”) issued final guidance on incentive compensation policies on June 21, 2010 (the “Interagency Guidance”). Compliance with the principles described in the Interagency Guidance is expected to be a part of bank examinations starting immediately. As a result, financial institutions should revisit their incentive compensation policies and practices and be prepared to justify these policies and practices during their next examination.
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