New Wall Street pay rules 'could follow TARP'

The Securities and Exchange Commission (SEC) is expected to base its new executive compensation rules on guidelines from the Troubled Asset Relief Program (TARP).

According to a report from Investment News, the SEC may decide to mimic the strict limits on remuneration found in the TARP provisions, which banned "golden parachutes" for a bank's top five executives.

Due to be published in April 2011, the regulator's proposals may also include curbs on incentive pay and measures allowing excessive bonuses to be "clawed back".

Andrew Oringer, a lawyer who specialises in compensation issues, told the publication that the Dodd-Frank reforms have pushed the question of how banks align their compensation structures "back to centre stage".

He commented: "As the deadline comes closer, financial institutions will have to turn their attention to what this means."

In October, the US Treasury indicated the final net cost of the TARP bailout at about $50 billion (£32 billion), although this comes down to $30 billion once the expected returns from insurance company AIG are factored in.