On February 4, 2009, President Obama announced his Administration’s intention to reform executive compensation practices in financial institutions accepting federal assistance. In response to the President’s remarks, the U.S. Department of the Treasury issued “guidelines” restricting, among other things, how recipients can compensate certain executives. The guidelines generally treat recipients of “exceptional” assistance differently from those receiving “generally available” assistance. However, they require all recipients’ CEOs to annually certify compliance with statutory, Treasury and contractual executive compensation restrictions, and also obligate such recipients’ compensation committees to explain how their senior executive compensation arrangements do not encourage excessive and unnecessary risk-taking.

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