US REGULATORS yesterday endorsed a proposal that executives at the largest financial institutions have half of their bonuses deferred for at least three years.
The proposal, approved by the Federal Deposit Insurance Corp (FDIC), has yet to be approved by other US financial regulators, including the Federal Reserve and Securities and Exchange Commission.
The FDIC warned that it may go further to ensure the bonuses properly align executives’ interests with investors, and is considering toughening the proposal to restrict executives from hedging deferred bonuses in the form of stock. “Whether we should be prohibiting hedging, that is an issue that is left open,” FDIC chairman Sheila Bair said.
The US plan is much softer than European Union guidelines limiting top bankers to receiving 20 per cent of their annual bonuses upfront in cash.