The NCUA board on Thursday unanimously passed an interagency incentive income compensation proposal that will impact only a small percentage of credit unions – a total of 258, which is nearly 5% of all credit unions.
The rule prohibits incentive-based compensation arrangements that would encourage inappropriate risks by providing excessive compensation or that could lead to material financial loss.
Affected institutions will be required to annually create and retain records documenting the structure of incentive-based compensation arrangements for seven years.
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