When these or similarly misaligned incentive compensation arrangements were common in a firm, the very foundation of sound risk management could be undermined by the actions of employees seeking to maximize their own pay. There is thus significant overlap between the interests of shareholders and of supervisors in the area of employee compensation.
That is why, as I will explain in a moment, we include an emphasis on sound corporate governance measures in our proposed guidance. Indeed, supervisory initiatives can reinforce the impetus for change already coming from shareholders and other market participants.