On March 23, 2010, the Special Master for TARP Executive Compensation issued a letter to all financial institutions that received TARP CPP funds prior to February 17, 2009.  The letter requests compensation data to permit the Special Master to review all bonuses, retention awards and other compensation paid to the institution’s senior executive officers and next 20 most highly-compensated employees from the receipt of TARP CPP funds through February 17, 2009.

In the event the Special Master determines that such compensation is inconsistent with the purposes of TARP or otherwise contrary to the public interest, the Treasury shall seek to negotiate with the TARP CPP recipient and the affected employee for appropriate reimbursements to the federal government.

The review is applicable to all institutions that received TARP assistance prior to February 17, 2009, even if the institution has repaid such funds.  Institutions that received TARP assistance after February 17, 2009 are not included in the review.  A complete list of the affected TARP institutions is included as an appendix to the Special Master’s letter.

Institutions must confirm receipt of the Special Master’s request no later than April 6, 2010, and must submit the required data and certification not later than April 22, 2010.

Institutions are not required to submit compensation data for employees with annual compensation (as defined) of $500,000 or less in all applicable years.  However, all institutions receiving a Special Master request are required to provide a certification to the Special Master regarding the number of affected employees who received annual compensation (as defined) greater than $500,000.  Because the definition of annual compensation is not necessarily intuitive, especially for non-SEC reporting institutions, all affected institutions are encouraged to consult with legal counsel before responding to the Special Master.

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