(a) This part limits and/or prohibits, in certain circumstances, the ability of insured depository institutions, their subsidiaries and affiliated depository institution holding companies to enter into contracts to pay and to make golden parachute and indemnification payments to institution-affiliated parties (IAPs).
(b) The limitations on golden parachute payments apply to troubled insured depository institutions which seek to enter into contracts to pay or to make golden parachute payments to their IAPs. The limitations also apply to depository institution holding companies which are troubled and seek to enter into contracts to pay or to make golden parachute payments to their IAPs as well as healthy holding companies which seek to enter into contracts to pay or to make golden parachute payments to IAPs of a troubled insured depository institution subsidiary. A “golden parachute payment” is generally considered to be any payment to an IAP which is contingent on the termination of that person's employment and is received when the insured depository institution making the payment is troubled or, if the payment is being made by an affiliated holding company, either the holding company itself or the insured depository institution employing the IAP, is troubled. The definition of golden parachute payment does not include payments pursuant to qualified retirement plans, nonqualified bona fide deferred compensation plans, nondiscriminatory severance pay plans, other types of common benefit plans, state statutes and death benefits. Certain limited exceptions to the golden parachute payment prohibition are provided for in cases involving the hiring of a white knight and unassisted changes in control. A procedure is also set forth whereby an institution or IAP can request permission to make what would otherwise be a prohibited golden parachute payment.
(c) The limitations on indemnification payments apply to all insured depository institutions, their subsidiaries and affiliated depository institution holding companies regardless of their financial health. Generally, this part prohibits insured depository institutions, their subsidiaries and affiliated holding companies from indemnifying an IAP for that portion of the costs sustained with regard to an administrative or civil enforcement action commenced by any federal banking agency which results in a final order or settlement pursuant to which the IAP is assessed a civil money penalty, removed from office, prohibited from participating in the affairs of an insured depository institution or required to cease and desist from or take an affirmative action described in section 8(b) (12 U.S.C. 1818(b)) of the Federal Deposit Insurance Act (FDI Act). However, there are exceptions to this general prohibition. First, an institution or holding company may purchase commercial insurance to cover such expenses, except judgments and penalties. Second, the institution or holding company may advance legal and other professional expenses to an IAP directly (except for judgments and penalties) if its board of directors makes certain specific findings and the IAP agrees in writing to reimburse the institution if it is ultimately determined that the IAP violated a law, regulation or other fiduciary duty.
Notes of Decisions
Faigin v. Signature Grp. Holdings, Inc., 79 A.L.R. Fed. 2d 679 (Cal. Ct. App. 2012).
“) Another FDIC regulation ( 12 C.F.R. § 359.0 (b) (2012)) explains: “The limitations on golden parachute payments apply to troubled insured depository institutions which seek to enter into contracts to pay or to make golden parachute payments to their IAPs.”
Vernon Hill, II v. TD Bank NA, 586 F. App'x 874 (3rd Cir. 2014).
· cites it 2× “By virtue of 12 C.F.R. § 359.0 (b), the OCC regulation also applies to Bancorp.”
Mountain Heritage Bank v. Rogers, 728 S.E.2d 914 (Ga. Ct. App. 2012).
· cites it 4× “The Bank claimed that the severance pay provided in Rogers’s employment contract amounted to a golden parachute payment, which the Bank was prohibited from making under the FDIC regulations set forth in 12 CFR § 359.0 et seq. The Bank’s president nevertheless agreed to make…”
Campbell v. Hampton Roads Bankshares, Inc., 925 F. Supp. 2d 800 (E.D. Va. 2013).
“4; see Golden Parachute and Indemnification Payments, 12 C.F.R. § 359.0 , et seq. From the filing of Plaintiffs complaint in state court until the Defendants filed their notice of removal on October 17, 2012, Defendants had not been served by Plaintiff.”
Wmi Liquidating Trust v. Fed. Deposit Ins. Corp., 110 F. Supp. 3d 44 (D.D.C. 2015).
“§ 1828 (k)(4)(A); see also 12 C.F.R. § 359.0 (b) (2012) (“A ‘golden parachute payment’ is generally considered to be any payment to an IAP which is contingent on the termination of that person’s employment and is received when the insured depository institution making the…”
Clark v. Carver Fed. Sav. Bank, 297 A.D.2d 599 (N.Y. App. Div. 2002).
“hat amending the complaint to seek recovery of the salary plaintiff would have earned from the time he was terminated through the expiration of the term of the employment agreement, rather than contractual severance benefits, would not avoid the requirement of OTS approval,…”
Bauer v. Fed. Deposit Ins. Corp. (D.D.C. 2023).
· cites it 3× “Cf 12 C.F.R. § 359.0 (b) (explaining that 12 the golden parachute limitations apply not only to troubled institutions but to "healthy holding companies which seek to enter into contracts to pay .”
Daniel J Wollschlager v. Donald Grill (Mich. Ct. App. 2022).
· cites it 2× “are able to obtain the necessary regulatory approval to make such payments to you under applicable law, including not by way of limitation, the restrictions on golden parachute payments set forth in 12 C.F.R. § 359.0 , et seq., the payments due to you under the Amended and…”
Mountain Heritage Bank v. Jerry Rogers (Ga. Ct. App. 2012).
· cites it 3× “Although the Bank’s defense involved a determination of the applicability of the federal regulatory scheme set forth in 12 C.F.R. § 359.0 et seq., removal of the case to federal court was not required and jurisdiction in the state trial court was proper.”
BBX Capital v. Fed. Deposit Ins. Corp. (11th Cir. 2020).
“See 12 C.F.R. §§ 359.0 , 359.1(f). Notably, the regulations define “payment,” which is incorporated by the golden parachute payment definition, to include “[a]ny direct or indirect transfer of any funds[.”
Wmi Liquidating Trust v. Bozzuti (In re Wash. Mut., Inc.), 598 B.R. 544 (Bankr. D. Del. 2019).
“12 C.F.R. § 359.0 (b). The Trust responds that the Claimants fail to include in their quote of footnote 31 the last sentence: "Notably, the immediately preceding Non-Settling Claimants also assert claims under other agreements subject to Part 359, rendering any aggregate payment…”
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