[Federal Register Volume 86, Number 235 (Friday, December 10, 2021)]
[Notices]
[Pages 70499-70500]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-26731]


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FEDERAL RESERVE SYSTEM


Agency Information Collection Activities: Announcement of Board 
Approval Under Delegated Authority and Submission to OMB

AGENCY: Board of Governors of the Federal Reserve System.

SUMMARY: The Board of Governors of the Federal Reserve System (Board) 
is adopting a proposal to extend for three years, without revision, the 
Recordkeeping Provisions Associated with the Guidance on Sound 
Incentive Compensation Policies (FR 4027; OMB No. 7100-0327).

FOR FURTHER INFORMATION CONTACT: Federal Reserve Board Clearance 
Officer--Nuha Elmaghrabi--Office of the Chief Data Officer, Board of 
Governors of the Federal Reserve System, Washington, DC 20551, (202) 
452-3829.
    Office of Management and Budget (OMB) Desk Officer for the Federal 
Reserve Board, Office of Information and Regulatory Affairs, Office of 
Management and Budget, New Executive Office Building, Room 10235, 725 
17th Street NW, Washington, DC 20503, or by fax to (202) 395-6974.

SUPPLEMENTARY INFORMATION: On June 15, 1984, OMB delegated to the Board 
authority under the Paperwork Reduction Act (PRA) to approve and assign 
OMB control numbers to collections of information conducted or 
sponsored by the Board. Board-approved collections of information are 
incorporated into the official OMB inventory of currently approved 
collections of information. The OMB inventory, as well as copies of the 
PRA Submission, supporting statements, and approved collection of 
information instrument(s) are available at https://www.reginfo.gov/public/do/PRAMain. These documents are also available on the Federal 
Reserve Board's public website at https://www.federalreserve.gov/apps/reportforms/review.aspx or may be requested from the agency clearance 
officer, whose name appears above.

Final Approval Under OMB Delegated Authority of the Extension for Three 
Years, Without Revision, of the Following Information Collection

    Report title: Recordkeeping Provisions Associated with the Guidance 
on Sound Incentive Compensation Policies.
    Agency form number: FR 4027.
    OMB control number: 7100-0327.
    Frequency: As needed.
    Respondents: U.S. bank holding companies, savings and loan holding 
companies, state member banks, Edge

[[Page 70500]]

Act and agreement corporations, and the U.S. operations of foreign 
banks with a branch, agency, or commercial lending company subsidiary 
in the United States (collectively, banking organizations).
    Estimated number of respondents: One-time implementation, large 
institutions: 1; one-time implementation, small institutions: 1; 
Ongoing maintenance: 5,259.
    Estimated average hours per response: One-time implementation, 
large institutions: 480; one-time implementation, small institutions: 
80; ongoing maintenance: 40.
    Estimated annual burden hours: One-time implementation, large 
institutions: 480; one-time implementation, small institutions: 80; 
ongoing maintenance: 210,360.
    General description of report: The Guidance on Sound Incentive 
Compensation Policies (the Guidance) is an interagency publication 
promulgated by the Board, the Office of the Comptroller of the 
Currency, and the Federal Deposit Insurance Corporation that is 
intended to assist banking organizations in designing and implementing 
incentive compensation arrangements that do not encourage imprudent 
risk-taking and that are consistent with the safety and soundness of 
the organization. The Guidance contains voluntary recordkeeping 
activities.
    The Guidance is based on three key principles. These principles 
provide that incentive compensation arrangements at a banking 
organization should:
    1. Provide employees incentives that appropriately balance risk and 
reward;
    2. Be compatible with effective controls and risk-management; and
    3. Be supported by strong corporate governance, including active 
and effective oversight by the organization's board of directors.
    The recordkeeping provisions of the Guidance are contained within 
principles 2 and 3.

Principle 2--Compatibility With Effective Controls and Risk Management

    Pursuant to Principle 2 of the Guidance, a banking organization's 
risk-management processes and internal controls should reinforce and 
support the development and maintenance of balanced incentive 
compensation arrangements. Principle 2 states that banking 
organizations should create and maintain sufficient documentation to 
permit an audit of the organization's processes for establishing, 
modifying, and monitoring incentive compensation arrangements. 
Additionally, global systemically important bank holding companies and 
banking organizations subject to Category II-IV enhanced prudential 
standards under Regulation YY and foreign banking organizations 
required to form an intermediate holding company under Regulation YY 
should maintain policies and procedures that (1) identify and describe 
the role(s) of the personnel, business units, and control units 
authorized to be involved in the design, implementation, and monitoring 
of incentive compensation arrangements, (2) identify the source of 
significant risk-related inputs into these processes and establish 
appropriate controls governing the development and approval of these 
inputs to help ensure their integrity, and (3) identify the 
individual(s) and control unit(s) whose approval is necessary for the 
establishment of new incentive compensation arrangements or 
modification of existing arrangements.

Principle 3--Strong Corporate Governance

    Pursuant to Principle 3 of the Guidance, banking organizations 
should have strong and effective corporate governance to help ensure 
sound compensation practices. Principle 3 states that a banking 
organization's board of directors should approve and document any 
material exceptions or adjustments to the organization's incentive 
compensation arrangements established for senior executives.
    Legal authorization and confidentiality: The recordkeeping 
provisions of the Guidance are authorized pursuant to the Board's 
examination and reporting authorities, located in sections 9, 11(a), 
25, and 25A of the Federal Reserve Act, section 5 of the Bank Holding 
Company Act, section 10(b) of the Home Owners' Loan Act, and section 
7(c) of the International Banking Act, and by section 39 of the Federal 
Deposit Insurance Act, which authorizes the Board to prescribe 
compensation standards.
    Because the recordkeeping provisions are contained within guidance, 
which is nonbinding, they are voluntary. There are no reporting forms 
associated with this information collection.
    Because the incentive compensation records would be maintained at 
each banking organization, the Freedom of Information Act (FOIA) would 
only be implicated if the Board obtained such records as part of the 
examination or supervision of a banking organization. In the event the 
records are obtained by the Board as part of an examination or 
supervision of a banking organization, this information may be 
considered confidential pursuant to exemption 8 of the FOIA, which 
protects information contained in ``examination, operating, or 
condition reports'' obtained in the bank supervisory process. In 
addition, the information may also constitute nonpublic commercial or 
financial information, which is both customarily and actually treated 
as private by the respondent, and thus may be kept confidential by the 
Board pursuant to exemption 4 of the FOIA.
    Current actions: On September 1, 2021, the Board published a notice 
in the Federal Register (86 FR 49033) requesting public comment for 60 
days on the extension, without revision, of FR 4027. The comment period 
for this notice expired on November 1, 2021. The Board did not receive 
any comments.

    Board of Governors of the Federal Reserve System, December 6, 
2021.
Michele Taylor Fennell,
Deputy Associate Secretary of the Board.
[FR Doc. 2021-26731 Filed 12-9-21; 8:45 am]
BILLING CODE 6210-01-P