October 22, 2009 / 5:33 PM / 8 years ago

Fed proposes executive pay guidelines

WASHINGTON, Oct 22 (Reuters) - The U.S. Federal Reserve on Thursday issued guidelines aimed at ensuring pay and reward structures for bank executives do not lead to the sort of excessive risk-taking that contributed to the financial crisis..

The guidelines apply to any employee able to take risks that could significantly and adversely affect the safety of a firm, the Fed said in a statement. The Fed will conduct a review of the practices of the 28 largest and most complex banking organizations.

The Fed said it was not setting pay caps or outlawing any specific practices. It did ask for public comment on formulas that shape the way executives are paid, such as ones requiring that at least 60 percent of the pay of bankers at large firms be deferred, and that at least 50 percent of incentive compensation be paid in the form of stock, options, or other equity-linked instruments. (Reporting by Mark Felsenthal, Editing by Chizu Nomiyama)

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