Proposed Guidance on Sound Incentive Compensation Policies — 2009-10-27 [E9-25766]

The Board is requesting comment on proposed guidance (the "guidance") designed to help ensure that incentive compensation policies at banking organizations do not encourage excessive risk- taking and are consistent with the safety and soundness of the organization. The Federal Reserve also is commencing two supervisory initiatives to spur progress by the banking industry in the development and implementation of sound incentive compensation arrangements, identify emerging best practices, and advance the state of practice more generally in the banking industry. The Federal Reserve expects all banking organizations to evaluate their incentive compensation arrangements and related risk management, control, and corporate governance processes and immediately address deficiencies in these arrangements or processes that are inconsistent with safety and soundness.