NEW YORK (
(C - Get Report)
(WFC - Get Report)
Capital One Financial
(COF - Get Report)
have agreed to expand their policies on "clawbacks" in the event of misconduct that causes financial or reputational harm, the New York City Comptroller John C. Liu said Thursday.
All three banks adopted new policies that allow their boards of directors to recover or "claw back" bonuses from executives who are responsible for misconduct that causes serious financial or reputational harm to the company. Previously, the directors could claw back pay only in the event of fraud or gross negligence or in the event of a financial restatement.
The banks also agreed to improve their disclosure of clawbacks. Capital One said it will disclose the total amount recovered in connection with any publicly disclosed event. Wells Fargo and Citigroup said they will consider disclosure on a case to case basis.
The agreements follow ones reached with
(JPM - Get Report)
in 2012, requiring the banks to clarify that their clawback policies covered not just employees but supervisors as well.
The Comptroller serves as the investment advisor to, custodian, and trustee of the New York City Pension Funds, which held a combined 20.8 million shares worth $867.59 million as of March 12.
The NYC Pension Funds and Comptroller Liu had filed shareowner proposals at the three banks, but withdrew them after the banks adopted significant changes to their current clawback policies.
Since the financial crisis and the passing of the Dodd Frank Act, most banks have said that they have implemented compensation policies that allow clawback of previous pay in the event of misconduct. Still, there have been few publicly reported cases of clawbacks.
The most high-profile example in recent times is JPMorgan's clawback of two years' worth of annual compensation from traders who were directly responsible for $6 billion in trading losses at the firm's chief investment office. The losses led the bank to amend its financial statements and was a black eye to its spotless reputation.
(UBS - Get Report)
was among the first to claw back bonuses after a $2 billion loss from a rogue trade.