Accordingly, we decided to place the burden on each of these LCBOs to develop a plan that would, with appropriate specificity, implement the principles we have identified into the firm’s compensation policies and practices. A rigorous process of planning and implementation, with accompanying supervisory oversight, makes it possible for these firms to customize their compensation arrangements.
Our supervisory approach to compensation practices at LCBOs will include an extensive horizontal review process, in keeping with our increased emphasis on this approach for the supervision of the largest institutions. This horizontal review, which we expect to commence shortly, will be led by a multidisciplinary coordinating group of Federal Reserve staff.