The new Section 4(a)(7) provides a much easier exemption to access, and empowers early stockholders to get liquidity for compensation that's been paid to them in stock or stock options.
Having learned from the crisis, Mr. Dudley said, the Fed would work to raise capital requirements, toughen liquidity standards and revise compensation guidelines "so that financial-sector employees are rewarded for long-term performance and discouraged from excessive risk-taking".
"Through capital, through restrictions in activities, through liquidity requirements, through executive compensation, through a whole variety of mechanisms, it's important that we limit excessive risk-taking, particularly when the losses are effectively borne by the taxpayer," Mr. Bernanke said.
Since the pendulum had swung too much in the direction of self-regulation and the principles-based approach, we now need more binding rules on liquidity, capital, leverage, transparency, compensation and so on.
That's especially true now, as companies take longer to go public and new forms of liquidity like secondary markets emerge, compensation models are changing dramatically in the Valley.
We are still in an environment of low long-term yields, ample liquidity and what appears to be a generally low level of compensation for risk.
She listed a series of risks, including a further dilution of capital and liquidity requirements, a failure to police shadow banks and derivatives, and compensation.
Mr. Barbetti says that for some, this could be as high as 70percentt of their compensation this year, which means these executives could find themselves dealing with the same personal liquidity issues.
"Liquidity has to have a price," says Peter Neu of the Boston Consulting Group.All for oneHowever, making dramatic changes to compensation structures involves a prisoner's dilemma.
The bulk of his 2007 compensation was from $20 million of stock and option awards made early in 2007, before borrower defaults soared and liquidity grew tight.
