Technical Change Made to NCUA ‘Golden Parachute Rule’

To clarify its implementation, the NCUA board of directors made technical modifications to its recent rule (Part 750) covering golden parachutes and indemnification payments to institution-affiliated parties.

After publication in the Federal Register, NCUA staff discovered the board’s intent regarding certain deferred compensation plans was not accurately reflected in the text of the rule. The technical change clarifies the board’s intent that plans permissible under §457(b) of the tax code be excluded outright from the definition of golden parachute payment in the same way the rule treats §401(k) plans. To conform the rule text to the intent of the board, the reference in the rule to §457 was corrected to read §457(b).

The rule prevents federally insured credit unions from providing lucrative rewards to departing executives in certain troubled situations. The “golden parachute” provisions apply to troubled credit unions affected by insolvency, a conservatorship, or rated CAMEL 4 or 5.

The interim final rule was made effective the same date of the original rule to avoid confusion.

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