Notice2021-26731
Agency Information Collection Activities: Announcement of Board Approval Under Delegated Authority and Submission to OMB
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 10, 2021
Issuing agencies
Federal Reserve System
Abstract
The Board of Governors of the Federal Reserve System (Board) is adopting a proposal to extend for three years, without revision, the Recordkeeping Provisions Associated with the Guidance on Sound Incentive Compensation Policies (FR 4027; OMB No. 7100-0327).
Full Text
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<title>Federal Register, Volume 86 Issue 235 (Friday, December 10, 2021)</title>
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[Federal Register Volume 86, Number 235 (Friday, December 10, 2021)]
[Notices]
[Pages 70499-70500]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-26731]
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FEDERAL RESERVE SYSTEM
Agency Information Collection Activities: Announcement of Board
Approval Under Delegated Authority and Submission to OMB
AGENCY: Board of Governors of the Federal Reserve System.
SUMMARY: The Board of Governors of the Federal Reserve System (Board)
is adopting a proposal to extend for three years, without revision, the
Recordkeeping Provisions Associated with the Guidance on Sound
Incentive Compensation Policies (FR 4027; OMB No. 7100-0327).
FOR FURTHER INFORMATION CONTACT: Federal Reserve Board Clearance
Officer--Nuha Elmaghrabi--Office of the Chief Data Officer, Board of
Governors of the Federal Reserve System, Washington, DC 20551, (202)
452-3829.
Office of Management and Budget (OMB) Desk Officer for the Federal
Reserve Board, Office of Information and Regulatory Affairs, Office of
Management and Budget, New Executive Office Building, Room 10235, 725
17th Street NW, Washington, DC 20503, or by fax to (202) 395-6974.
SUPPLEMENTARY INFORMATION: On June 15, 1984, OMB delegated to the Board
authority under the Paperwork Reduction Act (PRA) to approve and assign
OMB control numbers to collections of information conducted or
sponsored by the Board. Board-approved collections of information are
incorporated into the official OMB inventory of currently approved
collections of information. The OMB inventory, as well as copies of the
PRA Submission, supporting statements, and approved collection of
information instrument(s) are available at <a href="https://www.reginfo.gov/public/do/PRAMain">https://www.reginfo.gov/public/do/PRAMain</a>. These documents are also available on the Federal
Reserve Board's public website at <a href="https://www.federalreserve.gov/apps/reportforms/review.aspx">https://www.federalreserve.gov/apps/reportforms/review.aspx</a> or may be requested from the agency clearance
officer, whose name appears above.
Final Approval Under OMB Delegated Authority of the Extension for Three
Years, Without Revision, of the Following Information Collection
Report title: Recordkeeping Provisions Associated with the Guidance
on Sound Incentive Compensation Policies.
Agency form number: FR 4027.
OMB control number: 7100-0327.
Frequency: As needed.
Respondents: U.S. bank holding companies, savings and loan holding
companies, state member banks, Edge
[[Page 70500]]
Act and agreement corporations, and the U.S. operations of foreign
banks with a branch, agency, or commercial lending company subsidiary
in the United States (collectively, banking organizations).
Estimated number of respondents: One-time implementation, large
institutions: 1; one-time implementation, small institutions: 1;
Ongoing maintenance: 5,259.
Estimated average hours per response: One-time implementation,
large institutions: 480; one-time implementation, small institutions:
80; ongoing maintenance: 40.
Estimated annual burden hours: One-time implementation, large
institutions: 480; one-time implementation, small institutions: 80;
ongoing maintenance: 210,360.
General description of report: The Guidance on Sound Incentive
Compensation Policies (the Guidance) is an interagency publication
promulgated by the Board, the Office of the Comptroller of the
Currency, and the Federal Deposit Insurance Corporation that is
intended to assist banking organizations in designing and implementing
incentive compensation arrangements that do not encourage imprudent
risk-taking and that are consistent with the safety and soundness of
the organization. The Guidance contains voluntary recordkeeping
activities.
The Guidance is based on three key principles. These principles
provide that incentive compensation arrangements at a banking
organization should:
1. Provide employees incentives that appropriately balance risk and
reward;
2. Be compatible with effective controls and risk-management; and
3. Be supported by strong corporate governance, including active
and effective oversight by the organization's board of directors.
The recordkeeping provisions of the Guidance are contained within
principles 2 and 3.
Principle 2--Compatibility With Effective Controls and Risk Management
Pursuant to Principle 2 of the Guidance, a banking organization's
risk-management processes and internal controls should reinforce and
support the development and maintenance of balanced incentive
compensation arrangements. Principle 2 states that banking
organizations should create and maintain sufficient documentation to
permit an audit of the organization's processes for establishing,
modifying, and monitoring incentive compensation arrangements.
Additionally, global systemically important bank holding companies and
banking organizations subject to Category II-IV enhanced prudential
standards under Regulation YY and foreign banking organizations
required to form an intermediate holding company under Regulation YY
should maintain policies and procedures that (1) identify and describe
the role(s) of the personnel, business units, and control units
authorized to be involved in the design, implementation, and monitoring
of incentive compensation arrangements, (2) identify the source of
significant risk-related inputs into these processes and establish
appropriate controls governing the development and approval of these
inputs to help ensure their integrity, and (3) identify the
individual(s) and control unit(s) whose approval is necessary for the
establishment of new incentive compensation arrangements or
modification of existing arrangements.
Principle 3--Strong Corporate Governance
Pursuant to Principle 3 of the Guidance, banking organizations
should have strong and effective corporate governance to help ensure
sound compensation practices. Principle 3 states that a banking
organization's board of directors should approve and document any
material exceptions or adjustments to the organization's incentive
compensation arrangements established for senior executives.
Legal authorization and confidentiality: The recordkeeping
provisions of the Guidance are authorized pursuant to the Board's
examination and reporting authorities, located in sections 9, 11(a),
25, and 25A of the Federal Reserve Act, section 5 of the Bank Holding
Company Act, section 10(b) of the Home Owners' Loan Act, and section
7(c) of the International Banking Act, and by section 39 of the Federal
Deposit Insurance Act, which authorizes the Board to prescribe
compensation standards.
Because the recordkeeping provisions are contained within guidance,
which is nonbinding, they are voluntary. There are no reporting forms
associated with this information collection.
Because the incentive compensation records would be maintained at
each banking organization, the Freedom of Information Act (FOIA) would
only be implicated if the Board obtained such records as part of the
examination or supervision of a banking organization. In the event the
records are obtained by the Board as part of an examination or
supervision of a banking organization, this information may be
considered confidential pursuant to exemption 8 of the FOIA, which
protects information contained in ``examination, operating, or
condition reports'' obtained in the bank supervisory process. In
addition, the information may also constitute nonpublic commercial or
financial information, which is both customarily and actually treated
as private by the respondent, and thus may be kept confidential by the
Board pursuant to exemption 4 of the FOIA.
Current actions: On September 1, 2021, the Board published a notice
in the Federal Register (86 FR 49033) requesting public comment for 60
days on the extension, without revision, of FR 4027. The comment period
for this notice expired on November 1, 2021. The Board did not receive
any comments.
Board of Governors of the Federal Reserve System, December 6,
2021.
Michele Taylor Fennell,
Deputy Associate Secretary of the Board.
[FR Doc. 2021-26731 Filed 12-9-21; 8:45 am]
BILLING CODE 6210-01-P
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