Introduction. Traditionally, most executive compensation decisions have been handled at the December meeting of the board of directors, and these decisions were based on limited information and the board’s subjective judgment. However, executive compensation has become more complex. The passage of the FDIC Improvement Act of 1991 (FDICIA), Dodd-Frank Wall Street Reform Consumer Protection Act, and Securities and Exchange Commission Regulations, regarding executive pay communications to stockholders, have made compensation procedures and decisions more challenging. Media coverage and stockholder interest have also increased in recent years. The result has been the need to develop a more formalized approach to the institutions’ total compensation programs.

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