[Federal Register Volume 81, Number 232 (Friday, December 2, 2016)]
[Notices]
[Pages 87126-87127]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-28903]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency


Agency Information Collection Activities: Information Collection 
Renewal; Submission for OMB Review; Guidance on Sound Incentive 
Compensation Practices

AGENCY: Office of the Comptroller of the Currency (OCC), Treasury.

ACTION: Notice and request for comment.

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SUMMARY: The OCC, as part of its continuing effort to reduce paperwork 
and respondent burden, invites the general public and other Federal 
agencies to comment on the renewal of an information collection as 
required by the Paperwork Reduction Act of 1995 (PRA).
    An agency may not conduct or sponsor, and a respondent is not 
required to respond to, an information collection unless it displays a 
currently valid Office of Management and Budget (OMB) control number.
    The OCC is soliciting comment concerning renewal of an information 
collection titled, ``Guidance on Sound Incentive Compensation 
Practices.'' The OCC also is giving notice that it has sent the 
collection to OMB for review.

DATES: Written comments should be submitted by January 3, 2017.

ADDRESSES: Because paper mail in the Washington, DC area and at the OCC 
is subject to delay, commenters are encouraged to submit comments by 
email, if possible. Comments may be sent to: Legislative and Regulatory 
Activities Division, Office of the Comptroller of the Currency, 
Attention: 1557-0245, 400 7th Street SW., Suite 3E-218, Mail Stop 9W-
11, Washington, DC 20219. In addition, comments may be sent by fax to 
(571) 465-4326 or by electronic mail to [email protected]. You may 
personally inspect and photocopy comments at the OCC, 400 7th Street 
SW., Washington, DC 20219. For security reasons, the OCC requires that 
visitors make an appointment to inspect comments. You may do so by 
calling (202) 649-6700 or, for persons who are deaf or hard of hearing, 
TTY, (202) 649-5597. Upon arrival, visitors will be required to present 
valid government-issued photo identification and submit to security 
screening in order to inspect and photocopy comments.
    All comments received, including attachments and other supporting 
materials, are part of the public record and subject to public 
disclosure. Do not include any information in your comment or 
supporting materials that you consider confidential or inappropriate 
for public disclosure.
    Additionally, please send a copy of your comments by mail to: OCC 
Desk Officer, 1557-0245, U.S. Office of Management and Budget, 725 17th 
Street NW., #10235, Washington, DC 20503 or by email to: oira 
[email protected].

FOR FURTHER INFORMATION CONTACT: Shaquita Merritt, OCC Clearance 
Officer, (202) 649-5490 or, for persons who are deaf or hard of 
hearing, TTY, (202) 649-5597, Legislative and Regulatory Activities 
Division, Office of the Comptroller of the Currency, 400 7th Street 
SW., Washington, DC 20219.

SUPPLEMENTARY INFORMATION: The OCC requests that OMB extend its 
approval of the following information collection:
    Title: Guidance on Sound Incentive Compensation Policies.
    OMB Number: 1557-0245.
    Abstract: Under the guidance, each national bank and Federal 
savings association is required to: (i) For a large national bank or 
Federal savings association, have policies and procedures that identify 
and describe the role(s) of the personnel and units authorized to be 
involved in developing and administering incentive compensation 
arrangements, identify the source of significant risk-related factors, 
establish appropriate controls governing these factors to help ensure 
their reliability, and identify the individual(s) and unit(s) whose 
approval is necessary for the establishment or modification of 
incentive compensation arrangements; (ii) create and maintain 
sufficient documentation to permit an audit of the organization's 
processes for developing and administering incentive compensation 
arrangements; (iii) have any material exceptions or adjustments to the 
incentive compensation arrangements established for senior executives 
approved and documented by its board of directors; and (iv) for a large 
national bank or Federal savings association, have its board of 
directors receive and review, on an annual or more frequent basis, an 
assessment by management of the effectiveness of the design and 
operation of the organization's incentive compensation system in 
providing risk-taking incentives that are consistent with the 
organization's safety and soundness.
    Type of Review: Regular.
    Affected Public: Businesses or other for-profit.
    Estimated Number of Respondents: 41 large banks; 1,381 small banks.
    Estimated Burden per Respondent: 520 hours (480 for setup; 40 for 
yearly

[[Page 87127]]

maintenance) for large banks; 120 hours (80 for setup; 40 for yearly 
maintenance) for small banks.
    Frequency of Response: Annually.
    Total Annual Burden: 187,040 hours.
    On July 27, 2016, the OCC issued a 60-day notice soliciting comment 
on the information collection, 81 FR 49356. One comment was received 
from an individual.
    The commenter stated that the burden estimates are low, 
unrealistic, and unsupported by empirical evidence. The commenter 
requested that the next notice explain how the burden estimates were 
calculated and the empirical evidence used in the calculation.
    The commenter believes that the requirements in the guidance 
requiring institutions to have policies, procedures, appropriate 
controls, and sufficient documentation to permit an audit of the 
incentive compensation arrangements and for the board of directors to 
review, at least annually, an assessment of the effectiveness of the 
design and operation of the bank's incentive compensation system to 
ensure safety and soundness would likely be met by having the internal 
audit department examine incentive compensation systems and provide 
reports to the board audit committee. The commenter estimates that, in 
institutions with $20 billion or more in total assets, a minimum of 
four internal auditors customarily spend three or four weeks auditing 
the effectiveness of the design and operation of incentive compensation 
systems, resulting in an annual assessment of the effectiveness of the 
design and operation of the bank's incentive compensation system at 
large banks taking a minimum of 640 hours to complete. The commenter 
also stated that this estimate would not include additional hours 
needed every year to: (i) Update policies; (ii) revise procedures; 
(iii) adjust controls; and (iv) document annual incentive payments and 
document approvals. The commenter believes that, in large, systemically 
important institutions, internal auditors can spend one to two thousand 
hours auditing the many incentive compensation plans for compliance 
with OCC requirements.
    The commenter also believes that the estimate for ``small banks'' 
is also grossly underestimated and that, in a small bank ($50 million 
in total assets), it would take one person at least one week to assess 
the effectiveness of the design and operation of the compensation 
systems and format the results to be submitted to the board of 
directors. This would be in addition to the 40 hours needed to update 
written policies and procedures, document annual incentive payments, 
and document approvals.
    The OCC uses the legal standard for estimating burden hours under 
the PRA (44 U.S.C. 3502(2)). The term ``burden'' means time, effort, or 
financial resources expended by persons to generate, maintain, or 
provide information to or for a Federal agency, including the resources 
expended for: (a) Reviewing instructions; (b) acquiring, installing, 
and utilizing technology and systems; (c) adjusting the existing ways 
to comply with any previously applicable instructions and requirements; 
(d) searching data sources; (e) completing and reviewing the collection 
of information; and (f) transmitting, or otherwise disclosing the 
information. The OCC believes that its burden estimates are accurate, 
given that institutions already have the required arrangements in 
place, including any required systems and procedures.
    The banking agencies \1\ estimated in their original notice \2\ 
that large institutions would spend 480 hours to modify their policies 
and procedures to monitor incentive compensation. Small institutions 
would spend 80 hours to establish or modify policies and procedures to 
monitor incentive compensation. Forty hours would be required to 
maintain an incentive compensation program.
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    \1\ OCC, Board of Governors of the Federal Reserve System, and 
Federal Deposit Insurance Corporation.
    \2\ 75 FR 36395 (June 25, 2010).
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    In the experience of the banking agencies, two months is typically 
required for a large institution to set up a program of this complexity 
and one business week is required for yearly maintenance. The banking 
agencies generated these estimates based on their experience with other 
information collections.
    Comments continue to be invited on:
    (a) Whether the collection of information is necessary for the 
proper performance of the functions of the OCC, including whether the 
information has practical utility;
    (b) The accuracy of the OCC's estimate of the information 
collection burden;
    (c) Ways to enhance the quality, utility, and clarity of the 
information to be collected;
    (d) Ways to minimize the burden of the collection on respondents, 
including through the use of automated collection techniques or other 
forms of information technology; and
    (e) Estimates of capital or startup costs and costs of operation, 
maintenance, and purchase of services to provide information.

    Dated: November 28, 2016.
Karen Solomon,
Deputy Chief Counsel, Office of the Comptroller of the Currency.
[FR Doc. 2016-28903 Filed 12-1-16; 8:45 am]
BILLING CODE 4810-33-P