FNMA Fannie Mae (QB)

WASHINGTON—U.S. regulators on Thursday released proposed Wall Street incentive-compensation rules that would place stricter limits on top executives' pay.

The proposal, in the works for five years and jointly written by six agencies, would overhaul how pay is crafted for a wide swath of high-level employees at banks, investment advisers, broker dealers and credit unions, as well as top managers at mortgage-finance companies Fannie Mae and Freddie Mac.

Under the rules, senior executives at the largest institutions would have to hold back more than half of their pay for four years, more than the three years that has become common practice in the industry. The move would provide firms up to seven years to "claw back" bonuses if it turns out an executive's actions hurt the institution. Though financial institutions already use clawbacks, the proposed rules would codify them for the first time as a government policy to revoke top officials' incentive pay if firms have to reinstate financial results.

New details of the plan were released publicly Thursday at a board meeting of the National Credit Union Administration. Five other regulators, including the Securities and Exchange Commission and the Federal Deposit Insurance Corp., are expected to vote on the measure in the coming weeks. All six regulators were involved in crafting the proposal released Thursday, and all six will have to sign off on the final version of the rule for it to become binding.

The comment period ends July 22.

Write to Donna Borak at donna.borak@wsj.com and Andrew Ackerman at andrew.ackerman@wsj.com

(END) Dow Jones Newswires

April 21, 2016 10:25 ET (14:25 GMT)

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