Click here to download a PDF of the Financial Institutions Alert - Treasury Issues TARP Executive Compensation Guidance
The U.S. Department of the Treasury (the “Treasury”) issued an interim final rule in June 2009 that supersedes the executive compensation rules and guidance the Treasury had issued previously and adds new requirements for financial institutions under the Emergency Economic Stabilization Act of 2008 (“EESA”), as amended by the American Recovery and Reinvestment Act of 2009 (“ARRA”). Although the rule became effective June 15, 2009, the public comment period on the rule remains open until August 14, 2009.
The new rule applies to all recipients of financial assistance under the Troubled Asset Relief Program (“TARP”), including assistance under the Capital Purchase Program (“CPP”). The rule also applies to any entities that own more than 50% of the TARP recipient and any entities of which the TARP recipient owns more than 50%. The rule will continue to apply as long as assistance (other than in the form of warrants issued to the Treasury) remains outstanding (the “TARP period”).