Laura Thatcher and Mike Stevens were quoted in a recent Bank Safety & Soundness Advisor article discussing the adoption of new regulations on incentive compensation arrangements. “It’s going to take some time to figure out what is the best way to craft incentive compensation plans that serve a dual purpose of properly incentivizing management and controlling and managing risk,” Thatcher said. “It’s easier said than done.”
She continued, commenting that banks will need to “get the right team together” and “identify who [their] senior executives are and who are the other employees who have a role that could involve risk. [They should] handicap . . . different employees in categories with a risk profile in mind.”
The regulations put the responsibility for compliance directly on banks’ boards of directors. Said compliance, according to Stevens, will prove a “significant undertaking.”