US regulators have proposed tighter pay rules for employees of financial institutions, in a bid to minimise excessive risk-taking at the sector.
Under the proposal rule, top employees at biggest banks would have to wait for at least four years to receive most of their performance-based pay.
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The new rule, which is the result of the 2010 Dodd-Frank financial overhaul, will also allow banks to set a seven-year period to reclaim bonuses from those bankers who take risks resulting in financial losses.
The new rules will allow top bankers to be held accountable for the longer-term effects of their risk taking, unlike the pay structure before the financial meltdown that allowed bankers to look for short term gains.
The plan will cover employees at banks and various financial firms such as investment advisers, credit unions, and mortgage-finance companies.
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By GlobalData
