30.4—Q-4: What actions are necessary for a TARP recipient to comply with the standards established under sections 111(b)(3)(A), 111(b)(3)(E), 111(b)(3)(F) and 111(c) of EESA (evaluation of empl
(a) General rule.
To comply with
the standards established under sections
111(b)(3)(A), 111(b)(3)(E), 111(b)(3)(F) and
111(c) of EESA, a TARP recipient must establish a
compensation committee by the later of ninety days
after the closing date of the agreement between
the TARP recipient and Treasury or September 14,
2009, and maintain a compensation committee during
the remainder of the TARP period. If a
compensation committee is already established
before the later of the closing date or September
14, 2009, the TARP recipient must maintain its
compensation committee. During the remainder of
the TARP period after the later of ninety days
after the closing date of the agreement between
the TARP recipient and Treasury or September 14,
2009, the compensation committee must:
(1)
Discuss, evaluate, and review at least
every six months with the TARP recipient's senior
risk officers the SEO compensation plans to ensure
that the SEO compensation plans do not encourage
SEOs to take unnecessary and excessive risks that
threaten the value of the TARP recipient;
(2)
Discuss, evaluate, and review with senior
risk officers at least every six months employee
compensation plans in light of
the risks posed to the TARP recipient by such
plans and how to limit such risks;
(3)
Discuss, evaluate, and review at least
every six months the employee compensation plans
of the TARP recipient to ensure that these plans
do not encourage the manipulation of reported
earnings of the TARP recipient to enhance the
compensation of any of the TARP recipient's
employees;
(4)
At least once per TARP recipient fiscal
year, provide a narrative description of how the
SEO compensation plans do not encourage the SEOs
to take unnecessary and excessive risks that
threaten the value of the TARP recipient,
including how these SEO compensation plans do not
encourage behavior focused on short-term results
rather than long-term value creation, the risks
posed by employee compensation plans and how these
risks were limited, including how these employee
compensation plans do not encourage behavior
focused on short-term results rather than
long-term value creation, and how the TARP
recipient has ensured that the employee
compensation plans do not encourage the
manipulation of reported earnings of the TARP
recipient to enhance the compensation of any of
the TARP recipient's employees; and
(5)
(a)
y the completion of the reviews of
the SEO compensation plans and employee
compensation plans required under paragraphs
(a)(1), (2), and (3) of this section.
(b)
(a)
3]Exclusion of TARP recipients with
no employees or no affected employees. For any
period during which a TARP recipient has no
employees, or has no SEO or compensation plan
subject to the review process, the TARP recipient
is not subject to the requirements of paragraph
(a) of this section.
(c)
(a)
3]Application to private TARP
recipients. The rules provided in paragraph
(a) of this section are also applicable to TARP
recipients that do not have securities registered
with the SEC pursuant to the Federal securities
laws. A TARP recipient that does not have
securities registered with the SEC pursuant to the
Federal securities laws and has received
$25,000,000 or less in financial assistance is
subject to paragraph (a) of this section, except
that, in lieu of establishing and maintaining a
compensation committee, such a TARP recipient is
permitted to ensure that all the members of the
board of directors carry out the duties of the
compensation committee as described in paragraph
(a) of this section. However, such a TARP
recipient will be required to establish and
maintain a compensation committee satisfying the
requirements of paragraph (a) of this section for
the first fiscal year following a fiscal year
during which the TARP recipient either registers
securities with the SEC pursuant to the Federal
securities laws or has received more than
$25,000,000 in financial assistance, and during
subsequent years of the TARP period.
(d)
(a)
3]Application to TARP recipients
that have never had an outstanding obligation.
For TARP recipients that have never had an
outstanding obligation, only paragraphs (a)(2),
(a)(4), (a)(5) (but for the narrative and
certification requirements of (a)(4) and (a)(5),
applied only to the requirements of paragraph
(a)(2)), (b) and (c) of this § 30.4 (Q-4) shall
apply.