3 more banks OK clawback deal with NYC

Citigroup Inc., Wells Fargo & Co. and Capital One Financial Corp. agreed to change their pay policies to make it easier to recover compensation from executives involved in misconduct.

Employees responsible for serious financial or reputational harm to a company as well as their supervisors are now subject to pay clawbacks under agreements the three banks reached with New York City Comptroller John C. Liu, the city official said Thursday in a statement. The policies are similar to a deal Liu reached last year with Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co., according to the statement.

"Executives need to be held financially accountable for misconduct that harms the company, and that includes improper behavior and reckless risk-taking by those they manage," Liu said in the statement. "This is a vital step toward reining in out-of-control executive pay based on short-term gains."

Previously the three banks only permitted clawbacks from executives who committed intentional or gross misconduct, according to the statement.

Liu filed shareholder proposals with each of the three banks and later withdrew them after the companies adopted changes to their compensation policies.

The lenders have each paid fines in recent years to settle allegations of deceptive or improper business practices, according to Thursday's statement. -- Bloomberg News