As we all reflect on the anniversary of the great financial collapse of 2008, let me say I'm immediately struck by how much regulatory activity has transpired since the demise of Bear Stearns and Lehman Brothers and the restructuring of other "too big to fail" financial behemoths. In quick response to the financial woes of U.S. institutions, the federal government and banking industry scrambled to enact TARP (Troubled Asset Relief Program) legislation. While the fundamental theme of TARP - bailing out institutions in peril - is familiar, a multitude of attached governance, risk and compliance responsibilities for financial companies now requires an agile and innovative response from corporate business intelligence and financial IT systems. Within the confines of TARP exists a complex web of politically sensitive business logic.
It is vital to realize that TARP calls for a greater amount of scrutiny, transparency and senior-level accountability than what was required by the Sarbanes-Oxley framework. This is especially true when it comes to issues of executive remuneration and bonuses. For corporate boards that have become de facto custodians for TARP money, fundamentally restructuring their executive compensation strategies to align sensibly with the U.S. Treasury's TARP guidelines has been an ongoing struggle. Under TARP, a wide array of provisions addresses everything from "equity as salary" payments to grandfather clauses that maintain employment contracts that were legally consummated before the TARP bailouts. The very employees subject to restrictions on bonus payments vary by each corporation.
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