View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

DESPITE EVOLVING RULES ON
EXECUTIVE COMPENSATION,
SIGTARP SURVEY PROVIDES INSIGHTS
ON COMPLIANCE

SIGTARP-09-003
AUGUST 19, 2009

SIGTARP
Office of the Special Inspector General
for the Troubled Asset Relief Program

August 19, 2009

Summary of Report: SIGTARP-09-003

DESPITE EVOLVING RULES ON EXECUTIVE
COMPENSATION, SIGTARP SURVEY PROVIDES INSIGHTS ON
COMPLIANCE

Why SIGTARP Did This Study

What SIGTARP Found

The Troubled Asset Relief Program (“TARP”)
was created by the Emergency Economic
Stabilization Act of 2008 (“EESA”), which was
enacted on October 3, 2008. TARP provided the
Secretary of the Treasury with various
authorities to restore the liquidity and stability of
the United States financial system and to
increase lending. The Act also placed restrictions
on executive compensation for all TARP
recipients. However, the American Recovery
and Reinvestment Act of 2009 (“ARRA”)
amended the original executive compensation
requirements established under EESA. As of
early July 2009, the Department of Treasury has
disbursed about $361 billion of TARP assistance
to over 650 financial institutions, many of which
are subject to executive compensation
restrictions.
The Congress and the public frequently ask
questions about compliance with executive
compensation restrictions. Accordingly,
in February 2009, SIGTARP sent survey letters
to 364 financial and other institutions that had
completed TARP funding agreements through
January 2009. The survey instrument provided
for open-ended responses. The goal was to elicit
as much information as possible while allowing
for different conditions at each institution.
The review and analysis was confined to the
survey responses-including supporting
documentation- as provided, reported and
certified by the TARP recipients.
The objective of this report was to address the
efforts of TARP recipients’ to comply with
executive compensation restrictions in place at
the time of our survey and plans to comply with
subsequently enacted changes in requirements.
This report is set against the background of the
evolving rules on executive compensation
requirements for TARP recipients. Our work
was performed in accordance with generally
accepted government auditing standards.

What SIGTARP Recommends
SIGTARP makes no recommendations in this
report.

This is the first of a series of SIGTARP audits on executive compensation.
When SIGTARP conducted this survey, the requirements for executive
compensation were still evolving. Shortly after SIGTARP distributed the survey,
ARRA amended EESA’s executive compensation restrictions. When
implemented by Treasury, the new restrictions would modify the original
executive compensation requirements established under EESA. Neither EESA
nor ARRA directly limit the annual base pay of senior executive officers; rather,
executive compensation restrictions placed thus far on CPP recipients have more
specifically targeted incentive compensation and severance payments.
Given the timing of the survey, many of the responses reflected uncertainty and
a wait-and-see attitude about the emerging guidelines and restrictions on
executive compensation. Nevertheless, many respondents provided insights
regarding their efforts to comply with the requirements as they understood them.
Survey responses regarding compliance with EESA bonus and severance pay
restrictions varied from simple statements of compliance to detailed answers
about efforts to assess compensation practices relative to the restrictions.
Although some recipients expressed frustration with changing compensation
guidance and legislation, many respondents noted actions they were taking at the
time of the survey based on known requirements and with the understanding that
final guidelines were pending. These actions included taking steps to assess risks
and procure expert compensation consultants.
Similarly, some recipients noted the changing nature of legislative requirements
and a lack of clear and final implementing guidance but provided a forwardlooking perspective. For example, one institution reported that the “company
was monitoring recent developments with respect to executive compensation
limitations including the recent enactment of the ARRA. The company will take
the steps necessary to comply with the 2009 Act, as the requirements are further
defined by the issuance of implementing regulations by the Treasury.”
Institutions also voiced concerns about future requirements for executive
compensation—such as retroactive application—and uncertainty about future
changes. Finally, other ongoing SIGTARP audit work has identified concerns
about the potential for compensation restrictions to disadvantage some firms
receiving TARP assistance in retaining key personnel. Several large firms stated
that they have already lost a number of executives as a direct result of the
executive compensation restrictions.
The responses to this SIGTARP survey provide necessary context for examining
the evolution of executive compensation requirements, adding clarity to what
was required, and highlighting some relevant issues that could impact
implementation of requirements going forward. As the executive compensation
picture becomes clearer in the future, SIGTARP plans to conduct follow-up
audits on this important topic to build on these initial findings.

In commenting on a draft of this report, Treasury
concurred with the report.

Special Inspector General for the Troubled Asset Relief Program

Office of the special inspector general
For the Troubled Asset Relief Program
1801 L Street, NW
Washington, D.C. 20220

Table of Contents
Introduction

1

Insights on Executive Compensation from SIGTARP Survey

7

Conclusions

13

Management Comments and Audit Evaluation

13

Appendices
A. Scope and Methodology

14

B. Survey Letter

16

C. Summary of Treasury’s June 15, 2009 Interim Rule
on Executive Compensation

18

D. Interim Final Rule Calendar

26

E. Audit Team Members

27

F. Management Comments

28

DESPITE EVOLVING RULES ON EXECUTIVE COMPENSATION ,
SIGTARP SURVEY PROVIDES INSIGHTS ON COMPLIANCE
SIGTARP REPORT 09-003

August 19, 2009

Introduction
The Emergency Economic Stabilization Act of 2008 (“EESA”),1 enacted on October 3, 2008,
authorized the Secretary of the Treasury to establish the Troubled Asset Relief Program
(“TARP”) to purchase troubled assets from financial institutions. As part of its implementation
of EESA, Treasury has promulgated certain requirements with respect to executive compensation
at the recipient organizations. Some of these limitations were explicitly stated in legislative
requirements, and others were proposed pursuant to the authority granted to the Treasury under
EESA. These requirements have evolved and changed over time; the latest requirements were set
forth in a June 15, 2009, set of interim final regulations published by Treasury in the Federal
Register. As of early July 2009, Treasury has disbursed about $361 billion of TARP assistance to
more than 650 financial institutions using funds authorized under EESA.
The Congress and the public frequently ask two questions about the investments made by
Treasury:
•

What have program recipients done with the money they received from Treasury?

•

Have the recipients complied with the executive compensation requirements that were a
condition of receiving the funds?

To address these questions, beginning on February 5, 2009, SIGTARP sent survey letters to 364
financial and other institutions that had completed TARP funding agreements through January
31, 2009 (See Appendix B). This report addresses the efforts of TARP recipients to comply with
the restrictions on executive compensation in place at the time of our survey and their plans to
comply with subsequently enacted and promulgated requirements.
Getting full information about compliance with requirements for executive compensation proved
difficult for a number of reasons:

1

•

the evolving nature of those requirements

•

the lag time associated with meeting some of the requirements

•

the American Recovery and Reinvestment Act was passed after the survey was sent to
TARP recipients

Public Law 110-343, October 3, 2008.

1

•

the more recent regulations promulgated by Treasury after TARP recipients had
responded to SIGTARP’s survey request

Nevertheless, SIGTARP believes that the responses provide necessary context for examining the
evolution of executive compensation requirements, add clarity to the nature of the requirements,
and highlight some relevant issues that could impact implementation of requirements going
forward. SIGTARP issued a separate report on the use of funds on July 20, 2009. 2

Background
From the outset of TARP, all financial institutions directly participating in TARP and under an
ongoing obligation to Treasury were expected to abide by the requirements for executive
compensation set forth in EESA and applicable Treasury regulations and guidance. Since EESA
was enacted, additional regulations, amendments, and notices on executive compensation have
been issued. Figure 1 illustrates the changes in executive compensation restrictions set forth by
Congress and Treasury over time.
Figure 1: Timeline for TARP Executive Compensation Limitations

EESA Legislation
Enacted

Treasury Announces
Proposed Amendment to
October 2009 Interim
Final Rule

Treasury Issues Capital
Purchase Program Interim
Final Rule

SIGTARP Survey
Mailed

Treasury Announces
Proposed Guidelines

Treasury Issues
Interim Final Rule to
Implement ARRA

ARRA Legislation

Source: SIGTARP Analysis of TARP Executive Compensation Guidance

Section 111 of EESA, as originally enacted, required all financial institutions that sell troubled
assets to the Treasury under TARP to abide by certain rules on executive compensation intended
to avoid unnecessary and excessive risks, to provide for recovery of bonus and incentive
payments based on criteria later proven to be materially inaccurate, and impose restrictions on
excessive departure pay (known as golden parachutes) to senior executive officers. On October
20, 2008, Treasury issued an interim final rule implementing the EESA restrictions on executive
compensation. This interim final rule established the original standards for executive
compensation for institutions participating in the Capital Purchase Program (“CPP”). The
primary provisions are described below:

2

SIGTARP-09-001, “Survey Demonstrates Banks Can Provide Meaningful Information On Their Use of TARP
Funds,” July 20, 2009.

2

•

Excessive risk: Incentive compensation for senior executive officers was required not to
encourage unnecessary and excessive risks that threaten the value of the financial
institution. The financial institution's compensation committee, or a committee acting in a
similar capacity, was required to review the incentive compensation arrangements with
its senior risk officers within 90 days of Treasury’s purchase of preferred shares under the
CPP.

•

Tax deductibility: The institution could not deduct more than $500,000 of executive
compensation for each senior executive officer based on limitations set forth under
Section 162(m)(5) of the Internal Revenue Code.

•

Clawback: SEO bonus and incentive compensations was required to be subject to a
clawback—the recovery of any bonus or incentive compensation paid to a senior
executive officer if statements of earnings, gains, or other criteria are later proven to be
materially inaccurate.

•

Golden parachute: Golden parachute payments were prohibited for senior executive
officers. A golden parachute was defined as “any payment in the nature of compensation
to (or for the benefit of) a senior executive officer made on account of an applicable
severance from employment to the extent the aggregate present value of such payment
equals or exceeds an amount equal to three times the senior executive officer’s base
amount.”

These restrictions covered the institution’s senior executive officers (“SEO”s), which were
defined as the Chief Executive Officer, Chief Financial Officer, and the three most highly
compensated executive officers. The restrictions were to apply for as long as Treasury held an
equity or debt position in the institution.
On January 16, 2009, Treasury announced proposed amendments to its October 2008 CPP
interim final rule to include requirements for reporting and recordkeeping with respect to the
executive compensation standards for CPP recipients. The January announcement stated that
these regulations would be effective on the date they were published in the Federal Register.
However, due to the transition of administrations and the resulting hold on all new regulatory
actions, these amendments were never published in the Federal Register; therefore, they were
never put into force.
Additional uncertainties about executive compensation restrictions flowed from proposed
guidance announced on February 4, 2009, and differing requirements enacted later that month.
On February 4, 2009, Treasury proposed restrictions that, among other things, generally sought
to limit going forward the total annual compensation of senior executives of TARP recipients to
$500,000, in addition to grants of long-term restricted stock and long-term incentive awards (or,
in the case of TARP recipients that did not receive exceptional assistance, to have this limit
waived through a shareholder vote on compensation)—and to increase the number of senior
officers covered by the clawback and golden parachute provisions. Treasury also proposed that
the guidelines would not apply retroactively to existing investments or to previously announced
programs, but would apply to newly announced programs. Before the February 2009 guidance
could be fully implemented, however, the American Recovery and Reinvestment Act (“ARRA”)

3

was signed into law on February 17, 2009. ARRA amended EESA requirements related to
executive compensation, including these provisions:
•
•
•
•
•

specifying what constitutes a golden parachute payment and the executives subject to a
prohibition on such payments
adding additional specificity to employees subject to clawback provisions
limiting incentive compensation to one-third of selected employees’ total compensation
(the number of employees affected depends on the amount of TARP funding received)
specifying categories of employees who would be subject to incentive compensation
restrictions, depending on the amount of TARP assistance received by the institution
requiring institutions receiving TARP assistance to provide for a non-binding shareholder
vote on executive compensation packages, the so-called, “Say on Pay” requirement

ARRA required Treasury to issue implementing regulations.
On June 10, 2009, Treasury announced its latest interim final rule to implement the executive
compensation requirements outlined in ARRA. The interim final rule stated that the rule was
effective on June 15, 2009, the date published in the Federal Register, and would be finalized
after consideration of comments received during a 60-day comment period. According to
Treasury officials, the latest Interim Final Rule attempts to harmonize requirements in ARRA
and prior guidance form Treasury as well as make the following changes to previous interim
rules or proposed guidance:
•

The annual compensation limit of $500,000 proposed for recipients participating in new
TARP programs proposed by Treasury in February 2009 (excluding long-term restricted
stock) was not retained.

•

Bonus payments to senior executive officers 3 and to a specified number of the most
highly compensated employees of TARP recipients were restricted to stock in an amount
not to exceed one-third of total compensation. 4

•

The golden parachute prohibition will now extend beyond SEOs to include the next five
most highly compensated individuals, and the definition of a golden parachute includes
any and all payments made at the time of departure or change in control for services not
performed.

•

The clawback requirement applies to the SEOs and the next 20 most highly compensated
individuals.

Although the above provisions generally apply to all TARP programs, the interim final rule
established separate requirements for institutions receiving exceptional assistance under the
3

A “named executive officer” of a TARP recipient is defined under Federal securities law to generally include the
principal executive officer (“PEO”), principal financial officer (“PFO”), and the next three most highly compensated
employees.
4
The rule defines “most highly compensated” employees by reference to total annual compensation as calculated
under federal securities regulations, in order to most accurately capture the amounts earned by these executives each
year. The number of most highly compensated employees covered by the limit depends on the amount of financial
assistance the company has received.

4

Targeted Investment Program (“TIP”), Systemically Significant Failing Institutions Program
(“SSFI”), and the Automotive Industry Financing Program (“AIFP”), as noted below. 5 For
additional information on Treasury’s June 15, 2009, Interim Rule on Executive Compensation
and the role of the Special Master for TARP Executive Compensation, see Appendix C.
The rule also created an Office of the Special Master for TARP Executive Compensation within
Treasury. For the TARP recipients receiving exceptional assistance, 6 the Special Master will
review compensation payments and structures for the SEOs and the next 20 most highly
compensated employees at each institution. In addition, he will be reviewing compensation
structures for executives officers and the next 75 most highly compensated employees (and the
executive officers) of TARP recipients receiving exceptional assistance. According to Treasury,
this is to ensure that compensation is structured to protect taxpayer interests and to promote longterm shareholder value.
Furthermore, the Special Master is granted a “look-back” authority to review, for all TARP
recipients, certain payments between the closing date of the contract with the TARP recipient
and February 17, 2009 (the date of ARRA’s enactment). The reviews will cover all bonuses,
retention awards, and other compensation paid to the 5 SEOs and the next 20 most highly paid
employees. This look back assessment will be conducted to determine whether any such
payments were inconsistent with the purposes of TARP or were otherwise contrary to the public
interest. The Special Master may then seek to negotiate for appropriate reimbursements.
The Special Master is also authorized to provide advisory opinions regarding the application of
the interim final rule to particular payments and compensation plans. These opinions may be
issued at the request of the participating TARP recipient or by the Special Master at his own
initiative.

Objectives
SIGTARP distributed its survey to TARP recipients to obtain information regarding specific
plans and the status of implementation of those plans to address executive compensation
requirements associated with the receipt of TARP funding. This report principally addresses the
efforts of banks to comply with restrictions on executive compensation that were in place at the
time of our survey. Subsequent to distributing our survey, ARRA was enacted. Many
respondents to our survey commented on the executive compensation restrictions in the new
legislation; therefore, we also are reporting on recipients’ plans to comply with these
requirements. This report is set against the background of the evolving rules on executive
compensation for TARP recipients.

5

The restrictions do not apply to those institutions that have repaid their TARP funds while Treasury still holds
warrants to purchase the common stock of those institutions.
6
The seven companies are American International Group, Bank of America, Citigroup, General Motors, General
Motors Acceptance Corporation, Chrysler Financial, and Chrysler.

5

Scope
SIGTARP sent the survey to 364 financial and other institutions that had completed TARP
funding agreements through January 31, 2009. Because the objective of this report is broad, the
open-ended survey elicited different levels of detail. Many banks were concerned about
business-sensitive information and requested that we keep their responses confidential.
Accordingly, pursuant to our legal obligations, SIGTARP is not attributing any results or
comments in this report to a specific institution. However, SIGTARP is in the process of
evaluating recipients’ claims of confidentiality; when we complete that process we will post
information provided by the respondents to the maximum extent permitted by law, allowing for
any necessary redactions.
This report is limited to assessing reported compliance of recipients with EESA regulations as
promulgated on October 14, 2008, and as they were proposed to be amended on January 16,
2009. We confined our review and analysis to the survey responses as reported and certified by
the TARP recipients. SIGTARP did not review any additional information or documentation
beyond that provided by respondents. Also, many TARP recipients responded within 90 days of
receiving TARP funds; therefore, they were not yet required to have implemented all executive
compensation requirements at the time of their response.
•

For a more complete discussion of the audit scope and methodology, see Appendix A.

•

For the letter sent to recipients of TARP funds through January 31, 2009, see Appendix
B.

•

For additional information on Treasury’s June 15, 12009 Interim Rules on Executive
Compensation and the role of the Special Master, see Appendix C.

•

For the timeframe to implement the interim final rules issued on June 15, 2009, see
Appendix D.

•

For a list of audit team members, see Appendix E.

•

For comments from the Department of the Treasury, see Appendix F.

6

Insights on Executive Compensation Compliance
from SIGTARP Survey
When SIGTARP conducted this survey, the requirements for executive compensation were still
evolving. Nevertheless, many respondents provided significant insights regarding their efforts to
comply with the requirements as they understood them. Currently, neither EESA nor ARRA
directly limits the annual base pay of senior executive officers; rather, the restrictions on
executive compensation that have been placed thus far on TARP recipients have more
specifically targeted incentive compensation and severance payments. Survey responses
regarding compliance with EESA bonus and severance pay restrictions varied from simple
statements of compliance to detailed answers regarding efforts to assess compensation practices
relative to the restrictions. Although some recipients expressed frustration with changing
compensation guidance and legislation, many respondents noted actions—such as the
procurement of expert compensation consultants—that they were taking at the time of the survey
based on known requirements with the understanding that final guidelines were pending.

Overall Pay Not Capped by Treasury’s Latest Interim Final
Rule
In considering executive compensation restrictions, it is important to understand prior and
current restrictions on employees’ base pay relative to other compensation. In its most recent
executive compensation guidance, Treasury has shifted its emphasis on capping base salaries.
Initially, EESA did not specifically limit overall compensation, but institutions could not deduct,
for income tax purposes, executive compensation in excess of $500,000 for each senior
executive officer. As recently amended through the ARRA legislation, EESA limits bonus
payments to senior executive officers and to other highly compensated employees of TARP
recipients to one-third of total compensation, but does not otherwise specifically set a pay cap.
At the same time, however, the $500,000 figure still has some relevance; the latest guidance
stipulates that the Special Master will automatically approve proposed compensation to
employees of TARP recipients receiving exceptional assistance as long as the employee’s total
annual compensation does not exceed $500,000, with any additional compensation paid in longterm restricted stock. In addition, TARP recipients have agreed in their contracts with the
Treasury not to deduct compensation in excess of $500,000 for executives subject to the
deduction limitation in Section 162 (m) of the Code. Appendix D shows the timeframes that
recipients of exceptional TARP assistance must meet to comply with the new regulations.
In a press statement announcing the new compensation guidelines on June 10, 2009, the
Secretary of the Treasury also announced plans to seek greater compensation reforms through
legislation and the regulatory process. For example, he announced that legislation would be
proposed to give the Securities and Exchange Commission (“SEC”) the authority to require
companies to give shareholders a non-binding vote on executive compensation. He also
emphasized the importance of efforts being taken by the Chairman of the Board of Governors of
the Federal Reserve System and the other bank supervisors to lay out broad standards on

7

compensation that will be more fully integrated into the supervisory process. 7 Such actions
would apply uniformly to regulated entities rather than being limited to institutions receiving
TARP assistance.

Survey Responses Address Compliance with Key Executive
Compensation Restrictions
Treasury’s approach to limit executive compensation of TARP participants has largely targeted
restrictions on incentive compensation and severance payments. Three key restrictions have
remained that were addressed in our survey:
•
•
•

compensation tied to excessive risk taking
bonuses based on materially inaccurate financial statements
payments made to executives upon severance from the company

At the time of the SIGTARP survey, these initial EESA provisions were the most current
guidelines placing executive compensation restrictions on TARP recipients. Based on selfreported data, CPP recipients appear to have been making a concerted effort to comply with
EESA’s restrictions on executive compensation, as noted below.

Risk Assessments Required of Bonus Compensation Plans
Because of the 90-day grace period after the date of their certification of compliance, only 52
institutions were required to have performed a risk assessment of SEO incentive compensation
arrangements by the time they responded to the SIGTARP survey. All of these institutions
reported having performed such a risk assessment as had approximately 60 percent of the
remaining 312 institutions for which the grace period had not yet expired.
Respondents provided varying degrees of detail in their risk assessments, ranging from providing
their risk assessment reports to simple statements of compliance. The following are examples of
responses that specifically addressed the risk assessment provision:
•

“An executive compensation risk assessment was performed by [the Bank’s] senior
risk officers within 90 days of Treasury’s purchase of securities. Based on the
materials reviewed and discussions with subject matter experts, [the Bank’s] senior
risk officers concluded that the executive compensation and incentive program does
not encourage the SEOs to take unnecessary and excessive risks.”

•

“[T]he Compensation Committee reviewed the SEO incentive compensation
arrangements with the company’s senior risk officers…to ensure that the SEO
incentive compensation arrangements do not encourage SEOs to take unnecessary
and excessive risk that threaten the value of the institution. The Committee met to
review certain reports and: (1) Discuss with the bank’s senior risk officers the long-

7

Treasury, “FINANCIAL REGULAORY REFORM: A New Foundation Rebuilding Financial Supervision and
Regulation,” June 17, 2009.

8

term and short-term risks that the bank faces that could threaten the value of the
company; (2) Identify the features of the company’s incentive compensation
arrangements that could lead SEOs to take such risks; and (3) Limit any such feature
in order to ensure that the SEOs are not encouraged to take risks that are unnecessary
or excessive.”
Some recipients provided documentation to support their responses, such as Board minutes or
compensation consultant reports. 8 However, most respondents did not provide any
documentation to support their responses, other than the attestation in the letter of response.

Clawback Provision Required
Nearly 80 percent of the institutions reported compliance with EESA provisions regarding
clawbacks. 9 The remaining 20 percent did not specifically address compliance with the
clawback provision or report overall compliance with executive compensation restrictions.
The following examples are representative of the responses:
•

“With respect to the clawback provisions, the SEOs of [the Bank] have executed
agreements…which allow [the Bank] to recover or clawback any bonus or incentive
compensation paid during the TARP period from SEOs if such bonus or incentive
compensation was awarded based on materially inaccurate financial statements or
other performance metric criteria.

•

“[E]ach SEO also signed a letter agreement whereby [the Bank] and each of the
SEOs…agreed that any bonus and incentive compensation paid to a SEO is subject to
recovery or clawback by [the Bank] during the time the preferred stock remains
outstanding if the payments were based on materially inaccurate financial statements
or any other materially inaccurate performance metric criteria….”

Severance Pay Limitations on Golden Parachutes
Nearly 83 percent of survey respondents reported compliance with the golden parachute
restriction. 10 The remaining 17 percent did not specifically address compliance with the golden
parachute provision or report overall compliance with executive compensation restrictions.
About 55 percent of the recipients reported enacting policies through the execution of letter
agreements, compensation agreements, amendments or waivers with the senior executive
officers, or by changing general compensation policies. These are some examples of how
institutions reported their compliance with these provisions:
8

The SIGTARP survey requested that a recipient’s “response should include copies of pertinent supporting
documentation (financial or otherwise) to support your response.” The survey did not define “pertinent” or ask for
specific documentation.
9
Institutions were considered to have reported compliance with the clawback provision if they stated that they were
in overall compliance with EESA regulations, or if they specifically stated they were in compliance with the
clawback provision. 288 institutions reported compliance as defined above.
10
Institutions were considered to have reported compliance with the golden parachute provision if they stated that
they were in overall compliance with EESA regulations, or if they specifically stated that they were in compliance
with the golden parachute provision. 296 institutions reported compliance as defined above.

9

•

“[M]anagement of [the Bank] asked five Senior Executive Officers (SEO) of the
holding company and subsidiary Bank to execute a letter agreement [supporting
documentation provided] agreeing to: no golden parachute payments….Each SEO
agreed to become legally bound by the letter.”

•

“The company is prohibiting any golden parachute payment to you during any ‘CPP
Covered Period’. A ‘CPP Covered Period’ is any period during which (a) you are a
senior executive officer and (b) Treasury holds an equity or debt position acquired
from the Company in the CPP.” 11

Almost one-fifth of the recipients provided documents to support their statements of compliance,
such as agreements and waivers.

Recipients Reported an Intent To Comply with Future
Requirements
Though not specifically asked by SIGTARP, nearly half of TARP recipients voluntarily reported
that they intended to comply with the new requirements for executive compensation specified in
the ARRA legislation. For example, one institution reported that:
•

“[The] company is monitoring recent developments with respect to executive
compensation limitations including the recent enactment of the ARRA. The company
will take the steps necessary to comply with the 2009 Act, as its requirements are
further defined by the issuance of implementing regulations by the Treasury.”

Nonetheless, some institutions voiced concerns about retroactive application, uncertainty about
future changes, and about the executive compensation requirements enacted during the time of
the survey.
Many recipients were aware that ARRA would place additional restrictions on executive
compensation and stated that they intended to comply with the new restrictions once Treasury
issued the required guidance. One institution made this comment:
•

“We are currently in the process, with the assistance of counsel, of reviewing the
ARRA to determine whether further modifications to our executive compensation
arrangements or other actions will be required pending adoption of regulations and
guidance by Treasury. In light of the provisions of ARRA, the Company’s
Compensation Committee will recommend, and our Board of Directors will adopt, a
TARP Compensation Compliance Policy that addresses each of the requirements
contained in EESA, ARRA, and the related Treasury guidelines.”

Forty institutions (about 11 percent) reported that they used outside consultants to monitor and
implement new developments on executive compensation restrictions. Most of these firms had
received less than $100 million in CPP funds. Several banks stated that they employed
11

This statement is a portion of an SEO letter agreement.

10

consultants to assist in compliance, design, and ongoing monitoring activities with regard to
executive compensation requirements. One institution stated that it hired an independent
compensation consultant to:
•

“assist [the Bank] in reviewing and assessing [the Bank’s] overall compensation
programs to comply with the CPP executive compensation rules as well as to monitor
and advise [the Bank] on additional regulations or changes required in light of
evolving executive compensation requirements in U.S. Treasury guidance and in the
[ARRA].”

Another bank used an outside consultant to determine independently whether the structure of the
SEO’s compensation package could lead to excessive risk taking. The consultant concluded that
it did not.

Some Concerns over New ARRA Requirements
ARRA was enacted after SIGTARP distributed the surveys but before TARP recipients
submitted their responses. During this time, some institutions expressed uncertainty about the
guidance for compliance with TARP executive compensation requirements and voiced concerns
about the changes in executive compliance guidelines. These are some of the concerns raised by
survey respondents regarding the new requirements under ARRA:
•

Unprecedented scope of the requirements: “As your office is aware, the new
executive compensation limitations of [EESA] and [ARRA] are without precedent in
Federal law, are barely five months old but have nevertheless changed significantly
within the short period…Nevertheless, we are working diligently to determine
precisely how these new executive compensation [limitations] apply to [the Bank].”

•

Retroactive nature of the requirements: “I’m sure that you can relate to our
frustration in consummating our TARP transaction [in January 2009] with what we
thought were set standards and restrictions that we agreed to—only to have new
restrictions seemingly applied and changed almost daily.”

•

Fears about possible future changes: “The fact that Congress in enacting ARRA
endorsed much (but not all) of the Treasury Guidelines brings into question whether
the other restrictions in the Treasury Guidelines will be enacted.”

Furthermore, some respondents stated that they may return CPP funds because the new
limitations would or may lead to a competitive disadvantage and hamper their ability to retain
top performers. One such recipient responded that it was “currently exploring the option of
returning this funding given the changes that are contemplated in [ARRA], along with the
demonstrated negative perception associated with financial institutions that have received TARP
funding.” Additionally, senior officials at two major banks that SIGTARP staff interviewed as
part of other ongoing work stated that they have lost employees to foreign and domestic
competitors who are not under CPP compensation restrictions. One of those banks stated that it
had lost five top executives to other firms as a direct result of compensation restrictions. Further,

11

other banks reported that they were having trouble recruiting new employees or were
experiencing higher levels of early retirements.

12

Conclusions
Since EESA was enacted on October 3, 2008, the legislation and implementing guidance on
executive compensation for TARP recipients have been in flux. Nevertheless, most CPP
recipients report that they have made a concerted effort to comply with executive compensation
limitations. Moreover, many institutions reported that they intend to comply with the additional
restrictions on executive compensation enacted under ARRA. Nonetheless, some recipients
voiced concerns about the new restrictions; in particular, they noted a need for further Treasury
guidance or regulations to implement ARRA executive compensation limitations.
As part of regulatory reform, the Administration recently made three proposals:
•

that regulators issue standards and guidelines to better align executive compensation
practices with long‐term shareholder value and to prevent compensation practices from
providing incentives that could threaten the safety and soundness of supervised
institutions,

•

that the SEC be given the authority to require companies to allow shareholders to vote on
executive compensation packages to help ensure that compensation packages are closely
aligned with the interests of shareholders, and

•

that the SEC be directed to promulgate independence standards for members of
compensation committees and for consultants and advisors to compensation committees,
to ensure that compensation committee are independent in fact not just in name.

These proposals could provide broad reform of executive compensation practices for all financial
institutions, not just for those receiving TARP assistance.

Management Comments and Audit Evaluation
In commenting on a draft of this report, the Assistant Secretary for Financial Stability concurred
with the report. The Office of Financial Stability also provided technical comments which
SIGTARP incorporated as appropriate. A copy of Treasury’s letter is reprinted in Appendix F of
this report.

13

Appendix A—Scope and Methodology
We performed the audit under authority of Public Law 110-343, as amended, which also
incorporates the duties and responsibilities of inspectors general under the Inspector General Act
of 1978, as amended. This audit reports on compliance with executive compensation
requirements by 364 institutions that completed TARP funding agreements through January 31,
2009. Our objective was to assess the efforts of TARP recipients to comply with executive
compensation restrictions that were in place at the time of our survey. Subsequent to distributing
our survey, the ARRA legislation was enacted. Many respondents to our survey commented on
the executive compensation restrictions in the new legislation; therefore, we also are reporting on
banks plans to comply with these requirements.
SIGTARP conducted this performance audit from February to July 2009, in accordance with
generally accepted government auditing standards. Those standards require that we plan and
perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. Within the limitations noted below, we
believe that the evidence obtained provides a reasonable basis for our findings and conclusions
based on our audit objectives.
To elicit in-depth information with greater richness of context, we developed a narrative survey
letter that provided for open-ended responses. We chose this approach because the institutions
are so diverse in terms of asset size, institution type, and institution-specific economic factors.
Regarding executive compensation, we asked each recipient to provide a narrative response that
outlined specific plans and the status of implementation of those plans for addressing executive
compensation requirements associated with the funding. We also asked recipients to include:
•

any assessments made of loan risks and their relationship to executive compensation

•

how limitations on executive compensation will be implemented in line with Treasury
guidelines

•

whether any such limitations may be offset by other changes to other, longer-term or
deferred forms of executive compensation

Furthermore, we encouraged recipients to include in their responses copies of pertinent
supporting documentation to support their responses. We also used some information regarding
the impact of executive compensation restrictions on retention of key personnel from interviews
of the chief executive officers of major banks based on other ongoing audit work.
We contracted with Concentrance Consulting Group, Inc. (“Concentrance”), a Section 8(a)
women-owned small business, to help us review and analyze the responses we received. We
interacted and worked with the Concentrance team at least weekly from April through July 2009
to help develop the analysis and produce the report. We took a number of steps to ensure the
consistency of our analysis. We developed a checklist for analysts to review each survey
response. If an analyst had questions related to a survey response, another analyst reviewed the
response; then we discussed these cases collectively until we reached consensus agreement in

14

interpreting the response relative to other responses. In addition, a quality control team that was
not involved in the analytical process reviewed all of the data entry.

Limitations on Data
SIGTARP’s review and analysis was confined to the survey responses and supporting
documentation as provided, reported, and certified by the TARP recipients. We did not
independently verify the data reported by the recipients. However, we did ask that each recipient
certify the accuracy of its responses under the penalty of law.

15

Appendix B—Survey Letter

16

17

Appendix C––Summary of Treasury’s June 15,
2009 Interim Final Rule on Executive
Compensation
On February 17, 2009, the executive compensation provisions contained in Section 111 of EESA
were amended by Section 7001 of the American Recovery and Reinvestment Act of 2009
(“ARRA”), which required that Treasury promulgate regulations to implement the ARRA
amendments. On June 10, 2009, Treasury released its Interim Final Rule on TARP Standards for
Compensation and Corporate Governance (the “Rule”), which implements EESA as amended by
ARRA. The Rule is an “Interim Final Rule.” It took effect when it was published in the Federal
Register on June 15, 2009, but there is a 60-day public comment period after which it may be
changed. The Rule “implement[s] ARRA provisions, consolidates all of the executivecompensation-related provisions that are specifically directed at TARP recipients into a single
rule (superseding all prior rules and guidance), and utilizes the discretion granted to the
[Treasury] Secretary under ARRA to adopt additional standards, some of which are adapted from
principles set forth” in guidance previously provided by Treasury in February 2009. The Rule
applies to all TARP recipients, defined in the Rule to include “any entity that has received or
holds a commitment to receive financial assistance” provided under TARP or any entity that
owns 50 percent or more, or is 50 percent or more owned by, such an entity. In general, the
executive compensation restrictions in the Rule apply only as long as the TARP recipient has an
“obligation” to Treasury; an “obligation” does not include Treasury holding warrants to purchase
common stock of the TARP recipient.
In general, the Rule defines financial assistance as “any funds or fund commitment provided
through the purchase of troubled assets” by Treasury through a direct financial transaction
between Treasury and the TARP participant. For example, CPP participants that directly sell
preferred stock to Treasury generally have received financial assistance under the Rule.
However, those institutions that post collateral to and receive loans from TALF are considered to
have not “received financial assistance provided under TARP” and therefore are not subject to
the Rule. Table 1 shows a breakdown of how the compensation and governance standards set
forth in the Rule apply to all TARP programs.

18

Table 1: Interim Rule Executive Compensation Restrictions as They Apply to
TARP Programs
TARP Program

Applicable

Capital Purchase Program
Capital Assistance
Program
Systemically Significant
Failing Institutions
Targeted Investment
Program
Asset Guarantee
Program
Automotive Industry
Financing program
Auto Supplier Support
Program
Auto Warranty
Commitment Program
Term Asset-Backed
Securities Loan Facility
Public Private Investment
Program
Making Homes Affordable

X
X

Notes
All participating institutions are subject to the
executive compensation restrictions.
All participating institutions are subject to the
executive compensation restrictions.

X

Restrictions apply to AIG.

X

Restrictions apply to Citigroup and Bank of America.

X

Restrictions apply to Citigroup.

X
X
X

Restrictions apply to GM, GMAC, Chrysler, and
Chrysler Financial.
Executive compensation restrictions apply only to
auto companies, not automobile purchasers
Executive compensation restrictions apply only to
auto companies, not automobile purchasers.
Program is not applicable to TALF participants.
Would apply only if there is a majority owner of the
Public Private Investment Fund (“PPIF”). Because
PPIF will be structured so that no entity can invest in
more than 9.9% of the fund, executive compensation
restrictions will not apply.
Program is exempted by statute.a

Unlocking Credit for Small
Restrictions apply only to the institution selling the
X
Business
eligible assets to Treasury.
Notes:
a
The Making Home Affordable program is exempted by statute from the executive compensation and corporate
governance standards set forth in the ARRA amendments. See Section 1002 of the American Recovery and
Reinvestment Act of 2009, P.L. 111-5, 2/13/2009.
Source: Treasury

Compensation Limits
The Rule establishes certain compensation requirements with which all TARP recipients must
comply. The number of employees to whom the requirements apply varies; in general, however,
the compensation limitations in the Rule apply to the TARP recipient’s senior executive officers
(SEOs) and most highly compensated employees, determined by reference to annual
compensation. The Rule defines annual compensation as the dollar value for total compensation
as determined under applicable federal securities laws.
Different types of compensation are addressed differently in the Rule. For example, the number
of employees for whom bonus payments are limited is based on the amount of TARP funding
received by the institution. The Rule did not include the proposed annual compensation limit for
new TARP programs of $500,000 (excluding long-term restricted stock) proposed by Treasury in
February 2009. Table 2 shows the specific compensation requirements set forth in the Rule and
how each requirement applies to TARP recipients.
19

Table 2: Compensation Limit Requirements
Requirement

Definition

How the Requirement Is
Applied

To Whom the
Requirement
Applies

Bonus Payments

Bonus, retention award, or
incentives

Employees identified in
Table 3 (based on the
level of TARP
assistance)

Commissions

Payment earned by an
employee consistent with
a program in existence for
that type of employee as
of February 17, 2009. If a
substantial portion of the
services provided by the
employee consists of the
direct sale of a product or
services to an unrelated
customer
Unnecessary risk taking
encouraged by employee
compensation plans

Bonus payments are prohibited–
except for payments made in
restricted stock (which cannot
have a value greater than 1/3 of
the employee’s total
compensation and must be
forfeitable if the employee does
not continue providing services
for the TARP recipient for at least
two years from the date of grant).
Commissions meeting the
definition in the Rule are exempt
from the limitations on bonuses,
retention awards, and incentive
compensation; however, fees
earned in connection with a
specified transaction (e.g. an
initial public offering) are not
commissions for purposes of the
Rule.
Review of employee
compensation plans by the
compensation committee, a
narrative explanation of the
committee’s analysis with
respect to risk, and certification
that the compensation committee
has completed the review.
All bonuses, retention awards,
and incentive compensation
must be subject to clawback if
the payments were based on
materially inaccurate
performance criteria. The TARP
recipient must actually exercise
its clawback rights unless it can
demonstrate that it would be
unreasonable to do so.

All TARP recipients

Excessive Risk

Employees identified in
Table 3 (based on the
level of TARP
assistance)

Clawback

Recovery by the company
of amounts paid to an
employee based on
materially inaccurate
performance criteria

Golden Parachute

Any payment to an
employee for departure for
any reason, or any
payment due to a change
in control

Prohibits any and all golden
parachute payments to the
applicable employees made at
the time of departure or upon a
change in control.

SEOs and the next 5
most highly
compensated
employees

Perquisite

Personal benefit, including
a privilege or profit
incidental to regular salary
or wages

Must disclose the amount,
nature, and justification for any
perquisite valued at more than
$25,000.

Employees identified in
Table 3 (based on the
level of TARP
assistance).

Source: Treasury

20

SEOs and the next 20
most highly
compensated
employees

Office of the Special Master for TARP Executive Compensation
Under the Rule, Treasury has created a new Office of the Special Master for TARP Executive
Compensation (“Special Master”) which will be responsible for the review and analysis of
executive compensation by TARP recipients. The Special Master’s scope is limited to executive
compensation and corporate governance issues under the Rule for TARP recipients. The Special
Master has the authority to accomplish these objectives:
•

Review compensation payments and plans at TARP recipients that have received
“exceptional assistance” (for the SEOs and 20 next most highly compensated
employees) and compensation structures (for the 100 most highly compensated
employees and any executive officers).

•

Review bonuses, retention awards, and other compensation paid before February 17,
2009, by TARP recipients and, negotiate reimbursements when appropriate.

•

Provide advisory opinions with respect to the application of the Rule and whether
compensation payments and plans are consistent with EESA, TARP, and the public
interest.

The Rule requires that the Special Master use specific principles when reviewing compensation
payments and plans at TARP recipients:
•

Risk: The compensation structure should avoid incentives for employees to take
unnecessary or excessive risks that could threaten the value of the TARP recipient,
including incentives that reward employees for short-term or temporary increases in
value, performance, or similar measures that may not ultimately be reflected by an
increase in the long-term value of the TARP recipient.

•

Taxpayer Return: The compensation structure, and amount payable where applicable,
should reflect the need for the TARP recipient to remain a competitive enterprise, to
retain and recruit talented employees who will contribute to the TARP recipient’s
future success, and ultimately to be able to repay TARP obligations.

•

Appropriate Allocation: The compensation structure should appropriately allocate the
components of compensation (for example, salary, executive pensions, bonus
payments, and incentives). The appropriate allocation may be different for different
positions and for different employees; in general, however, for executives or other
senior-level positions, a significant portion of the overall compensation should be
long-term compensation that aligns the interest of the employee with the interests of
shareholders and taxpayers.

•

Performance-based Compensation: An appropriate portion of the compensation
should be performance-based over a relevant performance period. Performance-based
compensation should be determined through tailored metrics that encompass
individual performance and/or the performance of the TARP recipient or a relevant
21

business unit, taking into consideration specific business objectives.
•

Comparable Structures and Payments: The compensation structure and pay should be
consistent with pay for those in similar positions at similar entities.

•

Employee Contribution to TARP Recipient Value: The compensation structure
should reflect the current or prospective contributions of an employee to the value of
the TARP recipient, taking into account multiple factors.

Exceptional Assistance Authority
Under the Rule, the Special Master has specific duties regarding payments and compensation
plans for executives of TARP recipients that have received exceptional assistance. For
companies receiving exceptional assistance, the Special Master will review compensation
payments for the SEOs and the 20 next most highly compensated employees at each institution.
In addition, he will be reviewing compensation structures for the 100 most highly compensated
employees (and the executive officers) of a TARP recipient receiving exceptional assistance.
According to Treasury, this is to ensure that compensation is fair and structured, to protect
taxpayer interests, and to promote long-term shareholder value.
“Look-Back” Authority
The Special Master will also be conducting a “look-back” review of certain payments at all
TARP recipients made prior to February 17, 2009 (the date of ARRA’s enactment). The review
will cover all bonuses, retention awards, and other compensation paid to the 5 SEOs and the next
20 next most highly paid employees. This review will encompass approximately 436 institutions
and 10,900 individuals. If the Special Master determines that payments were made
inappropriately or contrary to the public interest, he will have the authority to negotiate for
appropriate reimbursement to the federal government.

The American Recovery and Reinvestment Act of 2009—Expanded
Provisions
The Rule expanded three ARRA provisions: review by the Board Compensation Committee of
all employee compensation plans, the “Say on Pay” requirement, and enhanced luxury
expenditure requirements.
Board Compensation Committee
Under the Rule, each TARP recipient must establish a Board Compensation Committee (the
“Committee”). The Committee must include independent directors from the company’s board
and will convene for the purpose of reviewing all employee compensation plans. An exception to
this requirement is made for TARP recipients that are not registered under the Securities
Exchange Act of 1934 and have received $25 million or less in TARP assistance. These
institutions may have their boards of directors carry out the duties of the Board Compensation
Committee.
The Committee is required to meet at least semiannually to review with senior risk officers the
proposed compensation plans of all employees and ensure that the TARP recipient is not
22

unnecessarily exposed to risks. In addition, the Committee will evaluate SEO compensation
plans to ensure that the plans do not encourage SEOs to take unnecessary and excessive risks that
could threaten the value of the TARP recipient. The Rule requires that the Committee submit an
annual report to Treasury providing a narrative description of how it limited any features of
compensation plans that would encourage SEOs to take unnecessary and excessive risks and any
features of compensation plans that could encourage the manipulation of reported earnings to
enhance the compensation of an employee.
“Say on Pay”
The Rule provides a provision for a non-binding vote by shareholders on executive
compensation, sometimes referred to as “Say on Pay.” This provision requires all TARP
recipients to permit an annual non-binding vote by shareholders on executive compensation as
required by SEC regulations.
Luxury Expenditures
The Rule also addresses corporate luxury expenses. The Rule states that the board of directors of
any institution receiving TARP funds must have a company-wide policy to define and prevent
excessive or luxury expenditures on entertainment or events, office and facility renovations,
aviation or other transportation services, and other activities or events that are not reasonable
expenditures for staff development, reasonable performance incentives, and other activities
conducted in the normal course of business operations.
The company must file this policy with Treasury and post it to the company website by the later
of:
• 90 days after the closing of the transaction between Treasury and the TARP recipient
OR
• 90 days following publication of the Rule
The Rule also requires that the PEO and PFO of each institution provide certification that any
expenditures needing approval by a senior executive or the board of directors have been properly
approved.

Additional Compensation and Governance Standards
According to Treasury, the Rule provides additional requirements that will further protect
shareholder value and increase transparency by all TARP recipients. In addition to the
compensation and corporate governance standards explicitly required by Congress, the Rule
includes three additional requirements: a prohibition on tax gross-ups, a requirement that TARP
recipients provide additional disclosure of perquisites, and a requirement that TARP recipients
provide disclosure with respect to compensation consultants.
Tax Gross-up
A tax gross-up is typically a specific payment to cover taxes due on certain compensation.
According to Treasury, studies have shown that these payments cost the companies that provide

23

them far more than the benefits the payments provide to executives. The Rule prohibits TARP
recipients from providing any tax gross-up payments to the SEO and to the next 20 highestcompensated employees.
Perquisites
In addition to disclosure requirements applicable to perquisites that are already enforced by the
SEC, the Rule subjects TARP recipients to more stringent requirements. SEC rules require
disclosure of perquisites given to the top five executive officers. The Rule expands this
requirement to include perquisites over $25,000 given to any employees of TARP recipients
subject to the bonus limitations described in Table 3. Additionally, firms must provide a
narrative description of, and justification for, these benefits.
Table 3: Employees Subject to Bonus Limitations, by Amount of TARP Funding
Amount of TARP Funding

Applicable Employees

< $25,000,000

most highly compensated employee

≥ $25,000,000 < $250,000,000

at least the 5 most highly compensated employees

≥ $250,000,000 < $500,000,000

SEOs and 10 next most highly compensated employees

≥ $500,000,000

SEOs and 20 next most highly compensated employees

Note: The ARRA amendments provide that, with respect to financial institutions that have received more
than $25 million in TARP assistance, the Secretary may apply the bonus limitations to a higher number of
employees if the Secretary determines that this is in the public interest.
Source: Treasury

Compensation Consultants
Many firms hire compensation consultants to determine appropriate pay levels for top
executives. According to Treasury, these consultants may have influence over the setting of
compensation, and it may be helpful for shareholders to know whether TARP recipients have
hired an outside consultant. Therefore, the Rule requires all TARP recipients to provide annually
to the Treasury and its primary federal regulator a narrative description of the services provided
by such consultants and a description of any benchmarking analysis performed by the
consultants.
Certifications
As recommended by SIGTARP, the Rule provides certification and reporting requirements on
the compensation and corporate governance guidelines that apply to TARP recipients. TARP
recipients must provide a list of the SEOs and the 20 most highly compensated employees for the
current fiscal year. Under the Rule, this determination is based on their prior fiscal year’s total
annual compensation. Each certification must also provide a statement by the officer certifying
that they “understand that a knowing and willful false or fraudulent statement made in
connection with the certification may be punished by fine, imprisonment, or both.” Table 4

24

describes the reporting and certification requirements and the frequency with which the
institution must provide the certifications. In addition to the requirements in Table 4, those
TARP recipients classified as receiving exceptional assistance must certify to Treasury that the
Special Master has approved their compensation payments and structures as required by the
Rule.
Table 4: Executive Compensation Reporting and Certification Requirements
Compliance
Category

Actions Requiring Certification

Certification Frequency

Board
Compensation
Committee

TARP recipient has created a Board
Compensation Committee that meets the
requirements of the Rule.

•

Compensation
Plans Excessive
Risk

The Committee has evaluated SEO
compensation plans and has identified and
limited features of plants that could lead to
unnecessary risks. The Committee has also
reviewed employee compensation plans for
features that could encourage the manipulation
of reported earnings.
TARP recipient has limited bonus payments to
applicable employees in accordance with
Section 111 of EESA and guidance thereunder.
TARP recipient has established an excessive or
luxury expenditures policy and has posted it to
the company web-site, and its employees have
complied with the policy.

•
•

Bonus Payments
Luxury
Expenditures

•

90 days after the end of each
fiscal year

•

Later of 90 days after the
closing of the transaction or
90 days after publication of
the Rule
90 days after the end of each
fiscal year
90 days after the end of each
fiscal year

•
Say on Pay

Compensation
Consultants
Perquisite

Clawback

TARP recipient has permitted non-binding
shareholder resolution on executive
compensation (publicly traded TARP recipients
only) in accordance with applicable SEC
regulations.
TARP recipient has disclosed whether an
executive compensation consultant was hired
and a description of services provided.
TARP recipient has disclosed the amount,
nature, and justification for offering any
perquisites greater than $25,000 to each of its
employees subject to bonus limitations.
TARP recipient has required that all bonus
payments are subject to recovery if the
payments were based on materially inaccurate
performance metrics.

Source: Treasury

25

Later of 90 days after the
closing of the transaction or
90 days after publication of
the Rule
Evaluate every 6 months
90 days after the end of each
fiscal year—must submit
narrative description and
certification

•

•

90 days after the end of each
fiscal year

•

90 days after the end of each
fiscal year

•

90 days after the end of each
fiscal year

Appendix D––Interim Final Rule Calendar
Timeframe

Action

June 15, 2009

Interim Final Rule published in the Federal Register.

August 14, 2009

Deadline for initial requests by TARP recipients receiving
exceptional assistance to the Special Master on SEO and the next
20 most highly compensated employees structures and payments.

September 14, 2009, or
90 days after closing

Establish independent Compensation Committee.
Establish, publish on company web-site, and provide to Treasury
the excessive and luxury expense policy.

120 days after Interim Final
Rule published
Deadline for initial requests to Special Master on compensation
structure for executive officers and 100 most highly compensated
employees not covered in August 14 submission.

90 days after end of
fiscal year

Principal executive officer and the principal financial officer
certifications due (ongoing).

120 days after end of
fiscal year

Compensation Committee certifications due to Treasury and
the company’s primary regulatory agency, including perquisites
and compensation consultant review (ongoing).

26

Appendix E—Audit Team Members
This report was prepared and the review was conducted under the direction of Barry Holman,
Audit Director, Office of the Special Inspector General for the Troubled Asset Relief Program.
Other key SIGTARP staff included Michael Kennedy, James Shafer, Anne Blank, Trevor
Rudolph, Amanda Seese, and Kamruz Zaman. The Concentrance staff members who supported
SIGTARP in the audit and report development include: Karmen Carr, Alex Kangelaris, Darius
Grayson, Patricia Taylor, Christopher Laughlin, Matthew Herman, Yusuf Makhkamov, and
Mandy Ho.

27

Appendix F––Management Comments

28

SIGTARP Hotline
If you are aware of fraud, waste, abuse, mismanagement, or misrepresentations affiliated with the
Troubled Asset Relief Program, please contact the SIGTARP Hotline.
By Online Form: www.SIGTARP.gov

By Phone: Call toll free: (877) SIG-2009

By Fax: (202) 622-4559
By Mail:

Hotline: Office of the Special Inspector General
for The Troubled Asset Relief Program
1801 L Street, NW
Washington, D.C. 20220

Press Inquiries
If you have any inquiries, contact our Press Office:
Kristine Belisle
Communications Director
Kris.Belisle@do.treas.gov
202-927-8940

Legislative Affairs
For Hill inquiries, contact our Legislative Affairs Office:
Lori Hayman
Legislative Affairs Director
Lori.Hayman@do.treas.gov
202-927-8941

Obtaining Copies of Testimony and Reports
To obtain copies of testimony and reports, please log on to our website at www.sigtarp.gov.

29