Financial Stability Board Releases Implementation Standards for its Principles for Sound Compensation Practices

On September 25, 2009, at the G-20’s Pittsburgh Summit, the Financial Stability Board (“FSB”) released implementation standards (the “Standards”) for its Principles for Sound Compensation Practices issued in April 2009. The Standards focus on what the FSB considers the critical topics to be addressed first: Pay Structure and Risk Alignment; Governance; Compensation and Capital; Disclosure; and Supervisory Oversight. The Standards state that ”[f]irms and supervisors should ensure the process of implementation is begun immediately and pursued rigorously in their respective jurisdictions.” We have briefly summarized the Standards’ key points and have suggested action steps for financial institutions to begin to take in response, highlighting important issues for firms to consider as they begin the process of addressing the issues raised by the Standards.