Regulatory Elements

SEC 2006-123
10 Key Elements

(1) Report TOTAL compensation of senior executives

(2) May have to disclose more than the top 5, e.g., highly compensated salespersons

(3) New CDA section required in addition to the tabular disclosure to include objectives of the compensation program, what the program is designed to reward and not reward, and more specific information about compensation elements.

(4) Clearly and plainly disclose according to SEC’s Handbook of Plain English

(5) Involvement of HCE’s in decisions regarding compensation programs must be disclosed

(6) Establishment of independence of compensation consultants

(7) Perks, deferred comp and post-employment comp must be clearly defined

(8) Increased disclosure of all related party transactions (pledging shares as collateral, etc.)

(9) Ensure independence of compensation committee

(10) Greater vigilance and diligence in reporting (certifications of CEO and CFO re: section 302 of SOX)


OCC Memo 2004-56
Institution should identify and quantify its compensation objective to ensure it is consistent with that objective and to ensure total compensation is not excessive.

Excessive compensation is an unsafe and unsound banking practice.