Since our last update, the Treasury has issued regulations and notices concerning definitions of key terms in EESA. For purposes of applying section 111(c) of EESA, including the determination of whether the aggregate amount of the assets acquired from a financial institution exceeds $300 million, two or more financial institutions that are treated as a single employer under sections 414(b) and 414(c) of the Internal Revenue Code are treated as a single financial institution. However, for purposes of applying the aggregation rules to determine whether section 111(c) of EESA applies, the rules for brother-sister controlled groups and combined groups are disregarded. The senior executive officers to which EESA applies include any "named executive officer" who: (1) is employed by a financial institution to which section 111 of EESA applies; and (2)(i) is the principal executive officer of such financial institution or of the parent entity); (ii) the principal financial officer ; or (iii) one of the three most highly compensated executive officers of such financial institution other than the PEO or the PFO. A "new employment contract" for purposes of EESA’s executive compensation limits means any material compensatory contract entered into on or after the date when section 111(c) of EESA applies to the financial institution. For this purpose, a contract that is renewed is treated as entered into on the date of the renewal and if a contract is materially modified, it is treated as a new contract entered into as of the date of the material modification.
The Treasury requests comments on the auction purchase related provisions of the executive compensation rules, which can be submitted at email@example.com or at www.regulations.gov.
More information about the Executive Compensation limits, including detailed "Question-Answer" explanations, can be found at Treasury Notice 2008-TAAP, which addresses acquisition of troubled assets through the auction process, or Treasury Notice 2008-PSSFI, which addresses acquisition of troubled assets through programs for systemically significant failing institutions.