a

GAO

United States Government Accountability Office

Report to Congressional Requesters

June 2007 FINANCIAL 

REGULATORS

Agencies Have 

Implemented Key 

Performance 

Management 

Practices, but 

Opportunities for 

Improvement Exist

GAO-07-678
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

June 2007

FINANCIAL REGULATORS 

Agencies Have Implemented Key 

Performance Management Practices, but 

Opportunities for Improvement Exist 

Highlights of GAO-07-678, a report to 

congressional requesters 

Congress granted financial 

regulators flexibility to establish 

their own compensation systems 

and required certain agencies to 

seek to maintain comparability

with each other in pay and benefits

to help the agencies overcome 

impediments to recruiting and

retaining employees and avoid 

competing for the same employees.

In response to a request, this report 

reviews (1) how the performancebased pay systems of 10 financial 

regulators are aligned with six key

practices for effective performance 

management systems, (2) the 

actions these agencies have taken 

to assess and implement

comparability in pay and benefits, 

and (3) the extent to which 

employees in selected occupations 

have moved between or left any of 

the agencies. GAO analyzed agency

guidance and policies, agency data

on performance ratings and pay

increases, agency pay and benefits

surveys, data from the Central 

Personnel Data File, and 

interviewed agency officials. 

The 10 federal financial regulatory agencies have generally implemented key 

practices for effective performance management but could improve 

implementation of certain practices as they continue to refine their systems. 

All of the financial regulators awarded some pay increases during the 

appraisal cycles we reviewed that were linked to employees’ performance 

ratings, although two also provided across-the-board pay adjustments, even 

to employees who had not received acceptable performance ratings, 

weakening the linkage of pay to performance. Both agencies have indicated

in the future annual pay adjustments will not be awarded to unsuccessful 

performers. The agencies have generally aligned individual performance 

expectations and organizational goals, connected performance expectations 

to crosscutting goals, used competencies to provide a fuller assessment of 

performance, and involved employees and stakeholders in the process. All 

of the agencies built safeguards into their performance management systems 

to enhance credibility and fairness. However, the extent to which the 

agencies communicated overall results of performance rating and pay 

increase decisions to all employees varied, and some could increase 

transparency by letting employees know where they stand relative to their 

peers in the organization, while protecting individual confidentiality. 

Financial regulators have hired external compensation consultants to 

conduct pay and benefits comparability surveys, exchanged pay and benefits 

information, explored the feasibility of conducting a common survey, and 

adjusted pay and benefits to seek to maintain comparability with each other. 

Although financial regulators have adjusted pay and benefits partly based on 

the results of their comparability efforts, there is some variation in pay 

ranges and benefit packages among the agencies. According to agency

officials, factors such as the year the agencies first became subject to 

comparability provisions, budget constraints, and the needs and preferences 

of workforces play a role in compensation decisions and contribute to this 

variation. Furthermore, agency officials emphasized that it was not their 

goal to have identical pay and benefits packages; rather, they considered pay 

and benefits as a total package when seeking to maintain comparability and 

when setting pay policies aimed at recruiting and retaining employees. 

Between fiscal years 1990 and 2006, few employees moved among financial 

regulators and the movement among these agencies presented no discernible 

trend. Specifically, 86 percent (13,433) of the 15,627 employees that left 

during this period (i.e., moving or resigning but not retiring), resigned from 

federal employment. Annually, the percentage of employees who moved to 

another financial regulator ranged from a low of 1 percent in fiscal year 1997

(16 out of the 1,362 who moved or resigned) to a high of 8 percent in fiscal

year 1991 (97 out of the 1,229 who moved or resigned). The total number of 

financial regulatory employees was 15,400 and 19,796 during those 2 years, 

respectively.

What GAO Recommends

GAO recommends that several 

regulators take steps to 

communicate the overall results of

appraisal and pay increase 

decisions to all employees while 

protecting individual 

confidentiality. The regulators 

generally agreed with the 

recommendations. 

www.gao.gov/cgi-bin/getrpt?GAO-07-678.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Orice Williams, 

202-512-8678, williamso@gao.gov or Brenda 

Farrell, 202-512-5140, farrellb@gao.gov. 
Page i GAO-07-678 Financial Regulators

Contents

Letter 1

Results in Brief 4

Background 7

Financial Regulators Generally Have Linked Pay to Performance 

and Made Distinctions in Performance, but Opportunities Exist 

for Improvements 9

Agencies Have Taken Various Actions to Seek to Maintain Pay and 

Benefits Comparability 26

Few Employees Have Moved among the Financial Regulators, Most 

Resigned from Federal Employment 31

Conclusions 35

Recommendations for Executive Action 36

Agency Comments and Our Evaluation 37

Appendixes

Appendix I: Objectives, Scope, and Methodology 40

Appendix II: Information on Agencies 47

Appendix III: Financial Regulators Have Implemented Key Practices in 

Varying Ways 50

Appendix IV: Actions Taken by Financial Regulators to Seek to Maintain 

Pay and Benefits Comparability and Pay and Benefits Data 87

Appendix V: Analysis of Movement Data of Financial Regulator 

Employees from Fiscal Years 1990 through 2006 112

Appendix VI: Comments from the U.S. Commodity Futures Trading 

Commission 136

Appendix VII: Comments from the Board of Governors of the Federal 

Reserve System 138

Appendix VIII: Comments from the Federal Housing Finance Board 139

Appendix IX: Comments from the National Credit Union 

Administration 140

Appendix X: Comments from the Office of Federal Housing Enterprise 

Oversight 144

Appendix XI: Comments from the Securities and Exchange Commission 145

Appendix XII: GAO Contacts and Staff Acknowledgments 146
Contents

Page ii GAO-07-678 Financial Regulators

Tables Table 1: Federal Financial Regulator Pay Comparability Legislative 

Provisions 8

Table 2: Selected OPM Locality Pay Percentages Compared to 

Financial Regulators’ Locality Pay Percentages, Fiscal Year 

2006 30

Table 3: Performance Appraisal Cycle by Agency 41

Table 4: Agency Information 47

Table 5: Pay and Benefits Surveys That Federal Financial 

Regulators Conducted through External Compensation 

Consultants, 1991-2006 88

Table 6: Selected Examples of Benchmarks Agencies Have Used to 

Assess Pay and Benefits Comparability 92

Table 7: Selected Examples of Recent Pay and Benefits 

Adjustments Resulting from Agencies’ Comparability 

Assessments 93

Table 8: Agencies’ Current Methods for Determining Locality Pay 

Percentages and Adjustments 95

Table 9: List of Benefits Offered by the 10 Financial Regulators 98

Table 10: Number of Financial Regulator Employees in 

Mission-Critical and other Occupations Who Moved to 

another Financial Regulator, Fiscal Years 1990–2006 114

Table 11: Commodity Futures Trading Commission Employment 

and Movement Data, Fiscal Years 1990–2006 116

Table 12: Farm Credit Administration Employment and Movement 

Data, Fiscal Years 1990-2006 118

Table 13: Federal Deposit Insurance Corporation Employment and 

Movement Data, Fiscal Years 1990–2006 120

Table 14: Federal Housing Finance Board Employment and 

Movement Data, Fiscal Years 1990–2006 122

Table 15: National Credit Union Administration Employment and 

Employee Movement Data, Fiscal Years 1990–2006 124

Table 16: Office of the Comptroller of the Currency Employment and 

Employee Movement Data, Fiscal Years 1990–2006 126

Table 17: Office of Federal Housing Enterprise Oversight 

Employment and Employee Movement Data, Fiscal Years 

1990–2006 128

Table 18: Office of Thrift Supervision Employment and Employee 

Movement Data, Fiscal Years 1990–2006 130

Table 19: Securities and Exchange Commission Employment and 

Employee Movement Data, Fiscal Years 1990–2006 132
Contents

Page iii GAO-07-678 Financial Regulators

Table 20: Other Federal Agencies Employment and Employee 

Movement Data, Fiscal Years 1990–2006 134

Figures Figure 1: Percentage of Regulatory Employees by Rating Level for 

Systems with Multiple Rating Levels, for Completed 

Appraisal Cycles Specified 22

Figure 2: Percentage of Regulatory Employees by Rating Level and 

Merit Increase Category for Agencies with Pass/Fail 

Performance Rating Systems, for Completed Appraisal 

Cycles Specified 24

Figure 3: Nonexecutive Minimum and Maximum Pay Ranges and 

Average Actual Pay for Mission-Critical Occupations by 

Regulator, 2006 28

Figure 4: Attrition among Financial Regulators, Fiscal Years 1990–

2006 33

Figure 5: Excerpt from an OCC Commissioned Examiner’s 

Individual Performance Plan 56

Figure 6: Excerpt from an FCA Individual Performance Plan 62

Figure 7: Example of OFHEO’s Worksheet for Weighting 

Performance Elements 65

Figure 8: Average Number of Employees in Mission-Critical and 

other Occupations Moving among the 9 Financial 

Regulators, Fiscal Years 1990–2006 113
Contents

Page iv GAO-07-678 Financial Regulators

Abbreviations

CFTC Commodity Futures Trading Commission

CPDF Central Personnel Data File

EEO Equal Employment Opportunity

FCA Farm Credit Administration

FDIC Federal Deposit Insurance Corporation

FHFB Federal Housing Finance Board

FIRREA Financial Institutions Reform, Recovery and Enforcement Act

IT information technology

NCUA National Credit Union Administration

OCC Office of the Comptroller of the Currency

OFHEO Office of Federal Housing Enterprise Oversight

OPM Office of Personnel Management

OTS Office of Thrift Supervision

SEC Securities and Exchange Commission

SSP Senior Staff Position

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Page 1 GAO-07-678 Financial Regulators

United States Government Accountability Office

Washington, D.C. 20548

A

June 18, 2007 Letr

Congressional Requesters:

The federal government must adapt to a range of major trends and 

challenges in the nation and the world, and to respond, it must have the 

institutional capacity to plan more strategically, identify and react more 

expeditiously, and focus on achieving results. Critical to the success of this 

transformation are the federal government’s people—its human capital. Yet 

the government has not transformed, in many cases, how it classifies, 

compensates, develops, and motivates its employees to achieve maximum 

results within available resources and existing authorities. One of the 

questions being addressed as the federal government transforms is how to 

update its compensation system to be more market based and performance 

oriented.1

 In this type of system, organizations consider the skills, 

knowledge, and performance of employees as well as the labor market 

when making pay decisions. 

Congress has recognized the need for flexibility in how selected agencies 

compensate employees. Congress granted the federal financial regulatory 

agencies the flexibility to establish their own compensation systems 

recognizing that the existing approach to compensating employees could 

impede these agencies’ ability to recruit and retain employees critical to 

meeting their organizational missions. In addition to the flexibility provided 

to the agencies over the years, Congress also directed most of the agencies 

to seek to maintain pay comparability and to consult with each other in 

doing so to ensure the agencies do not compete with each other for 

employees.2

 The 10 federal financial regulatory agencies reviewed in this 

report are the Commodity Futures Trading Commission (CFTC), the Farm 

Credit Administration (FCA), the Federal Deposit Insurance Corporation 

(FDIC), the Federal Housing Finance Board (FHFB), the Board of 

Governors of the Federal Reserve System (Federal Reserve Board), the 

National Credit Union Administration (NCUA), the Office of the 

Comptroller of the Currency (OCC), the Office of Federal Housing 

1

GAO, 21st Century Challenges: Reexamining the Base of the Federal Government, GAO05-325SP (Washington, D.C.: February 2005).

2

See, e.g., section 1206 of the Financial Institutions Reform, Recovery, and Enforcement Act 

of 1989 (FIRREA), Pub. L. No. 101-73. See also, H. Conf. Rpt. No. 101-222, 457-458 (1989). 

While FIRREA uses “compensation” to mean “pay,” for purposes of this report, 

compensation is defined as employee pay and benefits.
Page 2 GAO-07-678 Financial Regulators

Enterprise Oversight (OFHEO), the Office of Thrift Supervision (OTS), and 

the Securities and Exchange Commission (SEC).

In our prior work, we identified key practices for effective performance 

management systems that collectively create a “line of sight” showing how 

team, unit, and individual performance can contribute to overall 

organizational goals and help individuals understand the connection 

between their daily activities and the organization’s success.3

In your February 2006 letter, you noted that the financial regulatory 

agencies are at different stages of implementing their performance-based 

pay systems and compensation authorities and that an examination of how 

they are implementing their systems could be valuable to other agencies 

pursuing performance-based pay systems. Our past work looking at 

agencies’ implementation of performance management and performancebased pay systems has shown that better linking pay to performance is very 

much a work in progress at the federal level.4

In response to your request, this report examines (1) how the performancebased pay systems of 10 federal financial regulatory agencies are aligned 

with six key practices for effective performance management systems, 

(2) the actions 10 federal regulatory agencies have taken to assess and 

implement comparability in pay and benefits with each other, and (3) the 

extent to which employees in selected occupations have moved between or 

left any of the agencies. 

For purposes of this review, we focused on six key practices for effective 

performance management, which are more closely related to planning, 

rating, and rewarding individual performance:5

3

GAO, Human Capital: Preliminary Observations on the Administration’s Draft Proposed 

“Working for America Act,” GAO-06-142T (Washington, D.C.: Oct. 5, 2005); Human Capital: 

Senior Executive Performance Management Can Be Significantly Strengthened to 

Achieve Results, GAO-04-614 (Washington, D.C.: May 26, 2004); and Results-Oriented 

Cultures, Creating a Clear Linkage between Individual and Organizational Success, 

GAO-03-488 (Washington, D.C.: Mar. 14, 2003). 

4

GAO, Human Capital: Implementing Pay for Performance at Selected Personnel 

Demonstration Projects, GAO-04-83 (Washington, D.C.: Jan. 23, 2004).

5

The other three key practices are: provide and routinely use performance information to 

track organizational priorities, require follow-up actions to address organizational priorities, 

and maintain continuity during transitions. 
Page 3 GAO-07-678 Financial Regulators

1. Align individual performance expectations with organizational goals.

2. Connect performance expectations to crosscutting goals.

3. Use competencies to provide a fuller assessment of performance.

4. Link pay to individual and organizational performance.

5. Make meaningful distinctions in performance.

6. Involve employees and stakeholders to gain ownership of performance 

management systems.

In this report, we present important aspects of the agencies’ 

implementation of the practices of linking pay to individual and 

organizational performance, which includes providing adequate safeguards 

to help ensure fairness and guard against abuse, and making meaningful 

distinctions in performance. We discuss the agencies’ implementation of 

the four other practices included in the list in appendix III.

To address our first objective, we analyzed the selected agencies’ 

performance management and pay systems’ guidance, policies, and 

procedures and other related documents; interviewed key agency officials 

and representatives of unions or other employee groups; examined a small, 

select set of employees’ individual performance plans to illustrate annual 

performance expectations for employees; and analyzed agencies’ 

performance management data, such as the distribution of performance 

ratings and performance-based pay increases. The individual performance 

plans, selected in conjunction with agency officials to reflect a mix of key 

locations, occupations, and grade levels at each agency, as well as the 

performance management data from each agency that we examined, 

pertained to each agency’s last completed performance appraisal cycle 

when we began this review.6

To address our second objective, we analyzed relevant statutes and 

legislative histories for the selected agencies; reviewed the most recent pay 

6

The smallest number of performance plans we examined from an agency was 1, in a case 

where the performance plans for all employees are completely standardized, and the largest 

number of plans we reviewed from an agency was 32. See table 3 in appendix I for more 

information on the dates of the performance appraisal cycles we reviewed at each agency.
Page 4 GAO-07-678 Financial Regulators

and benefits surveys from these agencies; obtained agency pay and benefits 

data; and discussed agencies’ informal interactions to assess pay 

comparability with agency officials. For the third objective, we analyzed 

data from the Central Personnel Data File (CPDF), which includes 

information on pay, benefits, personnel actions, and other data to support 

statistical analyses of executive branch personnel management programs, 

to determine employee movement. 

We conducted various inspections and electronic testing of agency data 

obtained for the first objective for reasonableness and the presence of any 

obvious or potential errors in accuracy and completeness. We also 

reviewed related agency documentation, interviewed agency officials 

knowledgeable about the data, and brought to the attention of these 

officials any concerns or discrepancies we found with the data for 

correction or updating. On the basis of these procedures, we believe the 

data are sufficiently reliable for use in the analyses presented in this report. 

Our data collection strategies were not designed to guarantee that we 

would identify all potential examples of how agencies may have 

implemented the various practices. An agency may have implemented a 

particular practice even if it is not specifically mentioned in the report. We 

did not independently verify the data in the pay and benefits comparability 

surveys the consultants conducted for the agencies or the pay and benefits 

data we received from the agencies. On the basis of our data reliability 

testing of CPDF data, we believe the CPDF data are sufficiently reliable for 

this review. Appendix I provides additional information on our scope and 

methodology. We conducted our work from February 2006 through June 

2007 in accordance with generally accepted government auditing 

standards.

Results in Brief Overall, the federal financial regulators have implemented key practices for 

effective performance management systems in ways that consider the 

unique needs of their organizational cultures and structures, but some have 

opportunities to improve implementation of certain practices as they 

continue to refine their systems. All of the regulators awarded some pay 

increases during the appraisal cycles we reviewed that were linked to 

employees’ performance ratings. However, CFTC and SEC also provided 

across-the-board increases to employees, even to the few employees who 

had not received acceptable performance ratings, weakening the linkage of 

pay to performance. Officials from both agencies stated that in the future, 

annual pay adjustments will not be awarded to unsuccessful performers. 

While all of the regulators built safeguards into their performance 
Page 5 GAO-07-678 Financial Regulators

management systems to enhance credibility and fairness, SEC did not 

establish and communicate performance standards to its nonexecutives, 

which could compromise the credibility of the system. Several regulators 

did not fully implement the safeguard of providing overall ratings and pay 

increase results to all employees, affecting employees’ ability to 

understand where they stood in their organizations. As a result, some 

regulators have opportunities to strengthen an important safeguard for 

providing transparency within their performance-based pay systems.

The financial regulators have hired external compensation consultants to 

conduct individual, formal comparability surveys, exchanged pay and 

benefits information, explored the feasibility of conducting a common 

survey, or adjusted pay and benefits to seek to maintain comparability 

requirements. Although officials said that they have adjusted pay and 

benefits partly based on the results of their comparability efforts, there is 

some variation in pay ranges and benefit packages among the agencies. For 

example, the regulators have varying minimum and maximum pay ranges 

for similar job series and offer different benefits such as tuition 

reimbursement and supplemental retirement plans. When discussing the 

reasons that may contribute to this variation, agency officials said that the 

year the agencies first became subject to comparability provisions, budget 

constraints, and the needs and preferences of the workforce play a role in 

compensation decisions and contribute to this variation. Furthermore, 

officials emphasized that it was not their goal to have identical pay and 

benefits packages; rather, they considered pay and benefits as a total 

package when seeking to maintain pay and benefits comparability and 

when setting pay policies aimed at recruiting and retaining employees. 

From fiscal years 1990 through 2006, the movement of employees among 

the financial regulators was very low and presented no discernible trend 

over the period, but 86 percent (13,433) of the 15,627 employees leaving the 

regulators voluntarily (i.e., moving or resigning), resigned from the federal 

government.7

 The number of employees who moved to another financial 

regulator ranged from a low of 16 of 1,362 who moved or resigned in fiscal 

year 1997 to a high of 97 of 1,229 who moved or resigned in fiscal year 1991. 

The total number of financial regulator employees was 15,400 (1997) and 

19,796 (1991) during those 2 years. (Federal Reserve Board data are 

excluded from the federal government’s personnel database and are not 

included in these analyses.) Some agency officials told us that they believe 

7

Resignations do not include employees who left an agency due to retirement.
Page 6 GAO-07-678 Financial Regulators

that the Financial Institutions Reform, Recovery and Enforcement Act 

(FIRREA) comparability provision and similar provisions in subsequent 

laws applicable to financial regulators have been effective in ensuring that 

regulators’ pay and benefits are generally comparable among the 10 

agencies, which probably helps minimize employee movement among 

financial regulatory agencies. The movement of mission-critical employees, 

including accountants, attorneys, auditors, examiners, economists, 

financial analysts, investigators, information technology specialists, and 

business specialists, to a different financial regulator also produced no 

discernible trends.

This report includes recommendations to CFTC, FCA FHFB, NCUA, 

OFHEO, and SEC. FCA, FHFB, and OFHEO should communicate the 

overall results of the performance appraisal and pay increase decisions to 

all employees agencywide while protecting individual confidentiality. 

NCUA, CFTC, and SEC should work with unions to communicate the 

overall results of the performance appraisal and pay increase decisions to 

all employees agencywide while protecting individual confidentiality. SEC 

should clearly communicate the criteria for making performance rating and 

pay increase decisions to nonexecutive employees and should assess 

senior executives’ performance at the end of the performance appraisal 

cycle regardless of the amount of funding available for performance-based 

pay increases.

We provided a copy of the draft report to the Chairman, Commodity 

Futures Trading Commission; Chairman of the Board and Chief Executive 

Officer, Farm Credit Administration; Chairman, Federal Deposit Insurance 

Corporation; Chairman, Federal Housing Finance Board; Chairman, Board 

of Governors of the Federal Reserve System; Chairman, National Credit 

Union Administration; Comptroller of the Currency, Office of the 

Comptroller of the Currency; Director, Office of Federal Housing 

Enterprise Oversight; Director, Office of Thrift Supervision; and Chairman, 

Securities and Exchange Commission, for review and comment. We 

received written comments from six of the agencies. They generally agreed 

with the findings and recommendations. See appendixes VI, VII, VIII, IX, X, 

and XI for letters received from CFTC, the Federal Reserve Board, FHFB, 

NCUA, OFHEO, and SEC. These six agencies, along with the other four, 

also provided clarifying and technical comments, which we have 

incorporated as appropriate. Several agencies described actions they plan 

to take to address the recommendation to communicate the overall results 

of the performance appraisal and pay increase decisions to all employees 

on an agency-wide basis while protecting individual confidentiality. 
Page 7 GAO-07-678 Financial Regulators

Background The 10 federal financial regulatory agencies in our review vary in size, 

mission, funding structure, whether they bargain with a union, and how 

long they have been implementing aspects of performance-based pay 

systems. For example, FHFB is the smallest agency with just over 120 

employees, while FDIC, the largest agency, had more than 4,300 employees 

as of September 2006 and has been implementing pay for performance 

since 1998. Likewise, these agencies regulate a range of activities including 

banking and securities and futures. Appendix II includes the financial 

regulators’ missions, funding structures, and whether they are unionized 

and bargain with a union over pay and benefits. 

Under Title 5 of the U.S. Code, the financial regulatory agencies have the 

flexibility to establish their own compensation programs without regard to 

various statutory provisions on classification and pay for executive branch 

agencies. At the same time these financial regulators received increased 

flexibility regarding compensation, Congress also generally required that 

they seek compensation comparability with each other. A provision in 

FIRREA requires six agencies—FDIC, OCC, NCUA, FHFB, FCA, and OTS—

in establishing and adjusting compensation and benefits, to inform each 

other and Congress of such compensation and benefits, and to seek to 

maintain comparability regarding compensation and benefits.8 Additional 

FIRREA provisions require FCA, FHFB, NCUA, OCC, and OTS to seek to 

maintain compensation and benefit comparability with the Federal Reserve 

Board.9

 Although the Federal Reserve Board is under no obligation to seek 

to maintain compensation or benefit comparability with these or any of the 

other financial regulators, it has agreed to share compensation information 

with the other financial regulators. 

The other three agencies are subject to their own compensation 

comparability provisions. As required by its 1992 enabling legislation, 

OFHEO must maintain comparability with the compensation of employees 

from the Federal Reserve Board, OCC, FDIC, and OTS and consult with 

those agencies in that regard.10 In 2002 legislation, SEC and CFTC were 

placed under comparability requirements. SEC must consult with and seek 

8

Pub. L. No. 101-73, section 1206, 103 Stat. 183, 523 (Aug. 9, 1989).

9

Sections 301, 702, 1202-3, and 1210 of Pub. L. No. 101-73.

10Section 1315 of the Federal Housing Enterprises Financial Safety and Soundness Act of 

1992, Pub. L. No. 102-550, 106 Stat. 3941 (1992).
Page 8 GAO-07-678 Financial Regulators

to maintain compensation comparability with FDIC, OCC, NCUA, FHFB, 

FCA, OTS and CFTC.11 However, as shown in table 1, this legislation did not 

require these agencies to seek to maintain compensation comparability 

with SEC. Similarly, CFTC must consult and seek to maintain 

compensation comparability with the six FIRREA agencies, but those 

agencies are not required to seek to maintain compensation comparability 

with CFTC.12

Table 1: Federal Financial Regulator Pay Comparability Legislative Provisions

Source: GAO analysis of comparability legislative provisions.

We previously identified key practices for effective performance 

management based on public sector organizations’ experiences both here 

and abroad.13 High-performing organizations seek to create pay, incentive, 

and reward systems that clearly link employee knowledge, skills, and 

contributions to organizational results. Performance-based systems reward 

employees according to their performance by using performance ratings as 

the basis for pay increases. Linking pay to performance can help to create a 

11Section 8(a) of the Investor and Capital Markets Fee Relief Act, Pub. L. No. 107-123, 115 

Stat. 2390 (2002).

12Section 10702(a) of the Farm Security and Rural Investment Act of 2002, Pub. L. No. 107-

171, 116 Stat. 516 (2002).

Comparability agencies

Agency

Comparability 

provisions

Year of 

provision

FIRREA agencies

CFTC

Federal 

Reserve

FCA FDIC FHFB NCUA OCC OTS Board OFHEO SEC

CFTC Post-FIRREA 2002 x x x x x x

FCA FIRREA 1989 x x x x x x

FDIC FIRREA 1989 x x x x x

FHFB FIRREA 1989 x x x x x x

NCUA FIRREA 1989 x x x x x x

OCC FIRREA 1989 x x x x x x

OFHEO Post-FIRREA 1992 x x x x

OTS FIRREA 1989 x x x x x x

SEC Post-FIRREA 2002 x x x x x x x

FRB Not required but shares information with a number of agencies regarding compensation and benefits

13GAO-03-488.
Page 9 GAO-07-678 Financial Regulators

performance-oriented culture by providing monetary incentives to become 

a top- performing employee. At the same time, as a precondition to linking 

pay to performance, performance management systems need to provide 

adequate safeguards to ensure fairness and guard against abuse. Providing 

adequate safeguards that help to ensure transparency can improve the 

credibility of the performance-based pay system by promoting fairness and 

trust. Safeguards can include establishing clear criteria for making rating 

decisions and determining merit increases, and providing overall results of 

performance rating and pay increase decisions to all employees, while 

protecting confidentiality. Effective performance management systems 

also make meaningful distinctions between acceptable and outstanding 

performance of individuals and appropriately reward those who perform at 

the highest level. As we have previously reported, effective performance 

management systems can provide management with the objective and factbased information it needs to reward top performance and provide the 

necessary information and documentation to deal with poor performers.14

Financial Regulators 

Generally Have Linked 

Pay to Performance 

and Made Distinctions 

in Performance, but 

Opportunities Exist for 

Improvements

Overall, the federal financial regulators have implemented key practices for 

effective performance management systems in ways that consider the 

unique needs of their organizational cultures and structures, but some have 

not fully implemented certain practices. For purposes of this section, we 

focus on the regulators’ implementation of the two key practices of (1) 

linking pay to performance (which includes building in safeguards), and (2) 

making meaningful distinctions in performance. First, we found that while 

the regulators generally linked pay to performance, two regulators 

awarded across-the-board increases to employees regardless of their 

performance. Second, while most regulators generally used safeguards in 

varying ways to increase transparency, one did not establish and 

communicate performance standards to its nonexecutives, which resulted 

in questions about how decisions were made and could compromise the 

credibility of the performance system. Third, many regulators did not fully 

implement the safeguard of providing overall ratings and pay results to all 

employees, which reduced the transparency of their performance-based 

pay systems. Fourth, we found that while most regulators used multiple 

rating levels to make meaningful distinctions in performance, employees 

were usually concentrated in one or two rating categories and all had very 

few poor performers. Finally, one agency did not complete performance 

14GAO-04-614. 
Page 10 GAO-07-678 Financial Regulators

ratings for senior officers due to lack of funding for pay increases, thereby 

missing an opportunity to provide valuable feedback. For information 

about the other four key practices as well as additional material pertaining 

to the linking pay to performance practice, see appendix III.15

Financial Regulators 

Generally Have Linked Pay 

to Performance, but Two 

Regulators Still Provided 

Increases to Performers at 

All Levels

All of the regulators awarded some performance-based increases during 

the appraisal cycles we reviewed that were linked to employees’ 

performance ratings, although two financial regulators also provided 

annual pay adjustments to employees, regardless of performance, during 

the appraisal cycles we reviewed. Specifically, CFTC provided an acrossthe-board pay increase to all employees to be equivalent to the cost of 

living adjustment received by General Schedule employees of the federal 

government in January 2006. During the 2005 appraisal cycle, SEC also 

provided all employees an across-the-board pay adjustment of 2.1 percent, 

regardless of their performance.16 SEC officials noted that this across-theboard pay adjustment was in accordance with the negotiated compensation 

agreement with the union.17 While the percentages of employees rated as 

unsuccessful or unacceptable at CFTC and SEC during those cycles were 

extremely small (less than 1 percent), these agencies lost opportunities to 

reinforce the linkage of pay to performance in their performance 

management systems. CFTC officials told us that the performance-based 

pay portion of the new performance management system that will begin on 

July 1, 2007, will require a minimum threshold performance rating for an

15The other four practices are (1) align individual performance expectations with 

organizational goals, (2) connect performance expectations to crosscutting goals, (3) use 

competencies to provide a fuller assessment of performance, and (4) involve employees and 

stakeholders to gain ownership of performance management systems; the financial 

regulators have implemented these important practices in various ways. 

16SEC had two distinct performance appraisal cycles, one for senior officers and one for all 

other employees. The completed cycles we examined were as follows: for senior officers 

from October 2004 to September 2005; for all other employees from May 2005 to April 2006.

17According to SEC officials, all employees received the annual across-the-board pay 

increase that all GS employees received. 
Page 11 GAO-07-678 Financial Regulators

employee to be eligible for a pay increase.18 SEC and its union are currently 

negotiating implementation of a new Compensation and Benefits 

Agreement, which provides that employees rated as unacceptable will not 

receive annual pay adjustments. SEC officials acknowledged that a 

negative perception occurs when employees who are not performing 

satisfactorily receive a pay increase.

Most of the financial regulators used their rating systems to differentiate 

individual performance to award performance-based increases and reward 

top performers during the appraisal cycles we reviewed. Furthermore, all 

of the agencies also provided increases that, while not directly linked to 

performance ratings, considered employee performance in some way. 

These increases included special bonuses or awards given to individuals or 

teams for special accomplishments or contributions, as well as promotions 

and within-pay-band increases. For example, FCA provided Achievement 

or Special Act Awards to employees for significant achievements or 

innovations towards a special program, project, or assignment that 

contributed to the agency’s or organizational unit’s mission, goals, and 

objectives. To receive these awards, employees had to have performed 

their regular duties at least at a fully successful level of performance. FCA 

also provided some pay increases for competitive and noncompetitive 

promotions during the completed appraisal cycle we reviewed. 

Pay increases linked to performance ratings accounted for only part of the 

total increases awarded to individual employees during the appraisal cycles 

we reviewed. See appendix III for more information on the different ways 

in which the regulators translated performance ratings into pay increases 

and budgeted for performance-based increases, as well as more 

information on other pay increases that involved considerations of 

performance.

18During the completed performance appraisal cycle we reviewed for CFTC (July 1, 2005, to 

June 30, 2006), the agency operated under a performance management system in which the 

only increases directly linked to performance ratings were some performance bonuses. In 

October 2006, CFTC introduced a new performance management system directive that 

affects the performance planning and appraisal processes. The agency will introduce an 

accompanying new pay policy in July 2007 that will complete the transition to a 

performance-based pay system under which merit increases will be linked to performance 

ratings. The new system was developed by an agency committee with employee and union 

input and the final approved system took effect on October 1, 2006. (The American 

Federation of Government Employees union has chapters at CFTC’s Chicago and New York 

offices.) CFTC officials informed us that they do not plan to continue the annual pay 

adjustments in the new system, but will continue to use locality pay percentages equivalent 

to General Schedule executive order locality percentage increases.
Page 12 GAO-07-678 Financial Regulators

Financial Regulators 

Generally Used Safeguards 

to Increase Transparency, 

but SEC Did Not Establish 

or Communicate 

Performance Standards for 

its Nonexecutive Employees

All of the financial regulatory agencies have built safeguards into their 

performance management systems to enhance the credibility and fairness 

of their systems, although they varied in how safeguards have been 

implemented. For example, with the exception of SEC, the agencies have 

used the safeguard of establishing and communicating (1) standards for 

differentiating among performance rating categories and (2) criteria for 

performance-based pay decisions, thus enhancing transparency, which can 

improve employee confidence in the performance management system. 

(See app. III for information on the financial regulators’ implementation of 

additional safeguards.)

CFTC’s four-level rating system (i.e., unsuccessful, successful, highly 

successful, and exemplary) defined the successful level of performance for 

areas that CFTC had identified as critical to employees’ job performance, 

and included some information on how to distinguish variations from the 

successful level of performance. However, an employee representative at 

CFTC maintained that the rating level descriptions did not sufficiently 

communicate to employees the skills and behaviors employees needed to 

demonstrate in order to move, for example, from the “successful” to the 

“highly successful” level. Employee representatives stated that even though 

there was helpful guidance on distinguishing between levels of 

performance in a CFTC manual, these descriptions were hard to 

understand and most employees did not refer to the CFTC manual for 

guidance. An agency official told us that the revised performance 

management system that went into effect in October 2006 is a five-level 

system, and includes descriptions of all five performance levels rather than 

only the successful rating level described in the system it replaced. 

Similarly, OFHEO defined how employees would be rated on its five-level 

rating scale for each of the performance elements included in their 

performance plans. These performance standards defined the middle level 

of performance (fully successful), and included what the rater should look 

at to determine if an employee is performing better or worse than this 

benchmark. An employee’s performance for each element was assessed 

and a total score was determined. OFHEO further distinguished between 

“high” and “low” levels within rating categories. For example, a rating of 

“outstanding” would be classified as being in either the high or low level of 

the outstanding rating category based on the performance score the 

employee received. Merit increases at OFHEO have been determined 

directly by employees’ performance ratings, so employees could ascertain 

the merit increases they would receive for given performance ratings. For 

example, an employee rated “high” commendable receives a higher merit 
Page 13 GAO-07-678 Financial Regulators

pay increase than one who is rated “low” commendable. OFHEO employee 

working group members noted that both supervisors and employees 

understand how the performance elements and standards have been 

applied through rating decisions, and they stated that employees generally 

understood what was expected of them to attain higher levels of 

performance and associated merit increases. However, an employee 

working group member also commented that when distinguishing between 

performance rating levels, some managers seemed to apply the 

performance standards more effectively than others, which could result in 

differences in how rating decisions were made. 

At FDIC, for nonexecutive/nonmanager employees to be eligible for 

performance-based pay increases, employees had to first earn a “meets 

expectations” rating. Then, in a second process called the “Pay for 

Performance” system, FDIC nonexecutive/nonmanagers were placed into 

one of four pay groups, based on an assessment of total performance and 

corporate contributions as compared with other employees in the same pay 

pool.19 The pay for performance program was essentially comparative, 

meaning that the contributions and performance of each employee were 

evaluated and rewarded on a relative basis within his or her pay pool, as 

compared to peers. According to union representatives, employees were 

not informed about how management made the distinctions in pay increase 

groupings. According to FDIC officials, there are no definitive descriptions 

or definitions of the performance levels for each of the three pay groups 

because employees are assessed compared to each other, not against fixed 

standards. Officials also said that information on the system for 

determining pay groups was provided to all employees in early 2006 after 

the compensation and benefits agreement became effective, when the 

system was first rolled out, and is explained to new employees at 

orientation. We did not determine how widespread the concern about how 

management made distinctions in pay increase groupings was among FDIC 

employees. 

In contrast, SEC officials did not establish standards upon which to base 

rating decisions for nonexecutive employees, nor did they communicate 

criteria used to make performance-based pay decisions to these 

19In the collective bargaining agreement for years 2006-2009, pay group 1 will receive a 5 

percent pay increase and 1 percent lump sum payment, pay group 2 will receive a 3.2 

percent pay increase and 1 percent lump sum, and pay group 3 will receive a 2.4 percent pay 

increase. Pay group 4, containing individuals who did not receive a “meets expectations” 

rating in the first appraisal process, will receive no increase.
Page 14 GAO-07-678 Financial Regulators

employees. For its nonexecutive employees, SEC used a two-level rating 

system in which individuals’ performance was rated as acceptable or 

unacceptable. According to agency management, SEC followed the 

definitions under Title 5 that are used by the rest of the government for 

differentiating between acceptable and unacceptable performance.20

However, SEC did not establish written performance standards for 

appraising employees’ performance as acceptable or unacceptable.

To determine performance-based pay increase amounts for nonexecutive 

employees, SEC developed a second phase process that involved making 

distinctions in contributions for those individuals who received a summary 

performance rating of acceptable. As part of the second phase, employees 

and their supervisors submitted contribution statements summarizing the 

employees’ accomplishments during the appraisal cycle. Using the 

summary statements and the supervisors’ own assessments, supervisors 

placed employees into one of four categories: (1) made contributions of the 

highest quality, (2) made contributions of high quality, (3) made 

contributions of quality, and (4) made no significant contribution beyond 

an acceptable level of performance. Next, a compensation committee 

within each office or division evaluated the contribution statements and 

the supervisors’ placements. For each employee, the committee 

recommended a merit pay increase ranging from zero to 4.41 percent 

(corresponding to “steps” 0 to 3) to an official from each office or division, 

who made the final determination of the employee’s merit increase.21

However, SEC did not develop criteria to differentiate between the four 

contribution categories that the compensation committees considered 

when recommending merit pay step increase amounts. In addition, SEC 

employee representatives told us that it was not clear to employees how 

the contribution statements and the subsequent supervisory 

recommendations were translated into the decisions about the four 

contribution categories into which employees would be placed. SEC 

officials noted that employees received copies of narratives written by their 

supervisors to describe the employees’ contributions; however, they 

acknowledged that the system could be more transparent. According to 

20Section 4301 of Title 5 of the U.S. Code defines unacceptable performance as failure to 

meet established performance standards in one or more critical performance elements.

21SEC used “steps” to indicate performance-based pay increases. Zero steps meant no 

increase, one step corresponded to an increase of 1.47 percent, two steps to an increase of 

2.94 percent, and three steps to an increase of 4.41 percent. 
Page 15 GAO-07-678 Financial Regulators

SEC officials, in an effort to increase transparency in the future, they plan 

to share with employees information on supervisors’ preliminary 

recommendations on ratings that are provided to the compensation 

committee, so that employees can see into which of the four contribution 

categories they were recommended for placement and the supporting 

documentation. If the committee changes an initial recommendation from 

a supervisor, SEC will provide the employee with the rationale for the 

change. An agency official indicated they are developing broad statements, 

such as “the committee had a broader perspective of employee 

contributions,” that address a range of possible reasons for changes. 

Some Financial Regulators 

Did Not Fully Implement the 

Safeguard of Providing 

Overall Ratings and Pay 

Increase Results to All 

Employees, Which Would 

Increase Transparency in 

Their Performance-Based 

Pay Systems 

The extent to which the financial regulators shared the overall results of 

performance ratings and pay increase decisions with all employees varied, 

and some agencies did not make this information widely available to 

employees. We have previously reported that the safeguard of 

communicating the overall results of performance appraisal and pay 

increase decisions while protecting individual confidentiality can improve 

transparency by letting employees know where they stand in the 

organization.22 An employee’s summary performance rating conveys 

information about how well an employee has performed against 

established performance standards, which is important, but not sufficient 

to provide a clear picture of how the employee’s performance compares 

with that of other employees within the organization. When the 

organization communicates where an employee stands, management can 

gain credibility by having honestly disclosed to the employee the basis for 

making pay, promotion, or developmental opportunity decisions that may 

have been based upon relative performance. 

The Federal Reserve Board communicated the overall results of the 

performance appraisal decisions to all employees by sharing annual 

performance rating distributions with all employees, disaggregated by 

division. Since this system for determining the amounts of performancebased increases for individuals based on their performance ratings is 

essentially driven by formula, employees know what their merit increases 

will be relative to others after receiving their performance ratings. 

22GAO-06-142T and GAO-04-614.
Page 16 GAO-07-678 Financial Regulators

At FDIC, the distribution of pay group assignments for all nonexecutive/ 

nonmanager employees who passed the first assessment process is fixed 

by the negotiated agreement with the union, so those employees know how 

performance-based pay increases will be distributed and the amounts of 

increases received by the various pay groups. Further, FDIC officials told 

us that, in accordance with the collective bargaining agreement, after 

completion of each annual pay for performance cycle they share data on 

the results of the pay grouping decisions for employees covered by the 

bargaining unit contract with union representatives. These include 

summary pay group data analyzed according to the agreement with the 

union, such as certain demographic data and individual rating information. 

According to an agency official, OCC began to post some limited 

information on the average size of some performance-based pay increases 

on the agency intranet in November 2006. The information included the 

average, agencywide percentage increases for merit increases, merit 

bonuses, and special act and spot awards, as well as the percentage of 

employees receiving the increases. 

During the performance appraisal cycle we reviewed, OTS shared with 

union representatives some data on average pay increases. The agency did 

not share ratings distribution data with the union, and did not make either 

performance-based pay increase or rating results information available to 

all employees. However, in November 2006, OTS distributed to all 

employees information for the recently completed appraisal cycle on the 

percentage of employees who received each performance rating level and 

the average pay increase percentages to be received by people at each 

level. The information was disaggregated by regions and Washington, D.C.

While SEC did not make the results of performance rating decisions 

available to all employees, officials said that they reported information on 

performance awards (bonuses) to the union and that, under 

implementation of the compensation and benefits agreement currently 

being negotiated, they plan to publish aggregated information on 

performance ratings under the planned new performance management 

system for nonexecutive employees. SEC officials also told us that they 

plan to provide information at the lowest possible organizational level 

while still protecting individual confidentiality. 

The remaining five financial regulators did not share overall data on ratings 

or performance increases widely with all employees, although in some 
Page 17 GAO-07-678 Financial Regulators

cases some information was shared with managers. The following outlines 

how information was shared: 

• CFTC shared information on the results of ratings and award decisions 

with managers on a Pay Parity Governance Committee, but not with all 

employees, for the appraisal cycle we reviewed. CFTC officials told us 

that there is no prohibition against sharing this type of information 

under the new performance management system directive, and they are 

aware that there is some interest among employees in receiving it. They 

said that the pay parity committee will determine whether there is value 

in releasing this information to all employees in the future. 

• At FHFB, an official told us that office directors see all the ratings within 

their offices and make the decisions about the performance-based pay 

increases for employees, but this information is not shared across 

offices or with all employees. However, the director of the Office of 

Supervision, FHFB’s largest office, has shared information with all staff 

in the office on the ranges of pay increases corresponding to different 

performance rating levels and base salary levels that were received by 

staff within the office for a given year, as well as the standards used to 

assign the merit increase amounts.

• Officials at OFHEO told us that just last year they started sharing 

information on the results of ratings and pay increase decisions with 

management, but that they have not yet shared this type of information 

with all employees. 

• FCA officials told us that they do not share aggregate results of the 

performance rating and pay increase decisions with all employees. They 

explained that, under a previous administration, in early 2000, an 

executive summary was prepared and posted that all employees could 

potentially access, which contained information on the results of ratings 

and pay increases. However, this information was not broadly 

disseminated directly to employees. 

• NCUA shares information on the results of the merit pay decisions with 

directors, but not with all employees. An NCUA official told us that it is 

up to the directors to decide whether or not to share this information 

with their staff. In comments on the draft report, NCUA explained that 

this is one of the issues involved in its current negotiations over pay and 

benefits with the National Treasury Employees Union, and that the 
Page 18 GAO-07-678 Financial Regulators

agency’s proposal to the union does provide for this type of 

transparency.

Agencies provided a variety of reasons for not sharing overall ratings and 

pay increase information more widely. Officials from FHFB and FCA told 

us that the relatively small size of their agencies, 122 and 248 employees, 

respectively, makes it harder to share this type of information while 

protecting individual confidentiality and that an FHFB official was not 

aware of employee demand for this type of information. FCA officials also 

mentioned that the emphasis in their performance management system is 

on rating individual employees against the standards, not against other 

employees and they wanted employees to focus on their individual ratings 

and performance. According to union representatives at OCC, the union 

has made multiple requests for data on the results of the performance 

rating and pay increase decisions but management has declined to share 

information that would enable the union to, in their words, perform a 

meaningful independent analysis of the ratings and pay increase decisions. 

OCC officials told us that they prefer not to share with employees 

disaggregated information on ratings and pay increase distributions 

because organizational units administer the process differently. For 

example, the percentages of individuals rated at the highest level (4) and 

next highest level (3) vary from unit to unit. Because units receive fixed 

pools of funds for performance-based increases, the average size of a merit 

increase that an employee receiving a level 4 may receive can vary from 

unit to unit, depending on how many individuals receive the highest 

rating.23 OCC officials told us that sharing information on average merit 

increases by unit with employees, without sufficient context of the factors 

considered when making these decisions, including more detailed rating 

information (which is privacy protected), could lead to misinterpretation of 

the data. 

However, not sharing information on the results of the performance rating 

and pay increase decisions processes can detract from the goal of a 

transparent and fair performance management system. This information 

needs to be presented in ways that protect individual confidentiality, such 

as by aggregating it. Without access to this type of information, individual 

employees can lose a valuable opportunity to understand how their 

performance stands relative to others in their organization. In cases where 

23See appendix III for a discussion of different ways in which agencies budgeted for 

performance-based increases, including use of funding pools.
Page 19 GAO-07-678 Financial Regulators

agencies negotiate agreements with unions, an important consideration is 

to reach agreement to share aggregate results of the rating and pay increase 

decisions with employees, while protecting individual confidentiality.

While Financial Regulators 

Generally Used Multiple 

Rating Levels to Make 

Meaningful Distinctions in 

Performance, Employees at 

Most Agencies Were 

Concentrated in One or Two 

Rating Categories, with Very 

Few Poor Performers

While most of the financial regulatory agencies used multiple rating levels 

to assess employee performance and make distinctions in performance, at 

most agencies employees were concentrated in one or two rating 

categories and very few received poor performance ratings. By using 

multiple-level rating systems, agencies have the capability to make 

meaningful distinctions in performance. Effective performance 

management systems make meaningful distinctions between acceptable 

and outstanding performance of individuals and appropriately reward 

those who perform at the highest level. As we have previously reported, 

performance management systems can provide management with the 

objective and fact-based information it needs to reward top performers and 

provide the necessary information and documentation to deal with poor 

performers.24 More specifically, using multiple rating levels provides a 

useful framework for making distinctions in performance by allowing an 

agency to differentiate, at a minimum, between poor, acceptable, and 

outstanding performance. We have reported that two-level rating systems 

by definition will generally not provide meaningful distinctions in 

performance ratings, with possible exceptions for employees in entry-level 

or developmental bands.25

Eight agencies used four or more rating levels. For example, as described 

earlier, OFHEO used a five-level rating category system to appraise 

employee performance and contributions toward achieving agency goals, 

and further distinguished between high and low performance scores within 

rating categories. As shown in figure 1, at the eight agencies with four- or 

five-level rating systems, the largest percentage of employees fell into the 

second highest rating category, except at OFHEO and the Federal Reserve 

Board. At OFHEO, more than half of the employees were placed into the 

high or low levels of the top rating category. Conversely, at the Federal 

Reserve Board (excluding economists), almost half of the employees fell 

into the third highest or middle (commendable) rating category. Across the 

eight agencies shown in figure 1, the percentage of employees who fell into 

24GAO-03-488.

25GAO-06-142T.
Page 20 GAO-07-678 Financial Regulators

the highest rating category varied from 10.6 percent for economists at the 

Federal Reserve Board, to 55 percent of employees at OFHEO.
Page 21 GAO-07-678 Financial Regulators

(This page is left intentionally blank.)
Page 22 GAO-07-678 Financial Regulators

Figure 1: Percentage of Regulatory Employees by Rating Level for Systems with 

Multiple Rating Levels, for Completed Appraisal Cycles Specified

Extraordinary

Outstanding plus

Outstanding

Commendable

Commendable plus

Marginal

Unsatisfactory

Extraordinary

Outstanding

Commendable

Marginal

Unsatisfactory

Outstanding

Excellent

Fully successful

Minimumly acceptable

Unacceptable

Federal

Reserve Board–

economists

(Oct. 2004–Sept. 2005)

Federal

Reserve Board–

all employees

except economists

(Oct. 2004–Sept. 2005)

FCA

(Oct. 2004–Sept. 2005)

Seven levels of rating Five levels of rating

23.8

10.6 12.1

29.6

44.7

2.3 0.8

16.6

35.1

47.3

0 0.9 0

27.0

0.8 0.4

48.0
Page 23 GAO-07-678 Financial Regulators

Note: The dates of the performance appraisal cycles varied across agencies, as indicated in this figure 

and in table 3, appendix I. SEC had two distinct cycles affecting two different groups of employees.

a

OFHEO distinguished between “high” and “low” level performance scores within rating categories. 

The percentage values shown in the graphic include employees with scores at both the high and low 

levels within categories. For example, the percentage value shown in the graphic for the “Outstanding” 

rating category includes those employees rated as high-level outstanding and low-level outstanding 

combined. According to OFHEO officials, about 32 percent of employees fell into the low-level 

outstanding category.

b

The new CFTC performance management system that went into effect in October 2006 has five rating 

levels.

SEC and FDIC used two-level rating systems (essentially pass/fail systems) 

to appraise the performance of certain groups of employees. Although twolevel rating systems by definition will not provide meaningful distinctions 

in performance ratings, both SEC and FDIC used a second process to 

determine performance-based pay increases and effectively make more 

meaningful performance distinctions. As figure 2 shows, the highest 

percentage of employees at FDIC fell into the second highest of four 

categories, in keeping with the fixed percentages included in the negotiated 

Outstanding

Exceptional

Fully successful

Minimally acceptable

Unacceptable

Exemplary

Highly successful

Sucessful

Unsuccessful

OTS

(Jan.–Dec. 2005)

CFTCb

(July 2005–June 2006)

OCC

(Oct. 2004–Sept. 2005)

4 (highest)

3

2

1 (lowest)

Exceptional

Highly successful

Fully successful

NCUA–

executives

(Jan.–Dec. 2005)

Minimumly successful

Four levels of rating

64.3

25.4

10.3

0 0 0.6 0.04

72.8

31.6

63.2

5.3

0

26.5

Highly successful

Exceptional

Fully sucessful

Minimumly acceptable

Unsatisfactory

NCUA–

all 

nonexecutive 

employees

(Jan.–Dec. 2005)

56.1

15.1

26.8

1.9 0.1

37.0

46.6

16.0

0.4

Outstanding

Commendable

Fully sucessful

Minimumly acceptable

Unsatisfactory

OFHEOa

(Apr. 2005–Mar. 2006)

55.5

24.8

45.6

28.0

0 1.6

33.6

8.5

1.9 0.5

Source: GAO analysis of agency data.

Outstanding

Commendable

Fully sucessful

Acceptable

Unacceptable

FHFB

(Oct. 2005–Sept. 2006)
Page 24 GAO-07-678 Financial Regulators

agreement with the union. At SEC, the largest percentage of employees fell 

into the third highest of four rating categories. 

Figure 2: Percentage of Regulatory Employees by Rating Level and Merit Increase Category for Agencies with Pass/Fail 

Performance Rating Systems, for Completed Appraisal Cycles Specified

Note: At SEC, senior officers were not rated during this rating cycle because, according to officials, 

the agency did not have the budget to fund any merit increases. SK employees at SEC include all 

employees other than senior officers.

Meets expectations

Meets expectations

Marginal

Does not meet expectations

99.7%

99.7%

0.3%

0%

0.3%

Total Total

Does not meet expectations

Pay Group 1–5% increase plus 1% lump sum

Pay Group 2–3.2% increase plus 1% lump sum

Pay Group 3–2.4% increase

Pay Group 4–no increase

25.3%

50.5%

23.9%

0.3%

Acceptable

Satisfactory

Minimumly satisfactory

Unsatisfactory

99.9%

Did not rate this cycle

Did not rate this cycle

Did not rate this cycle

Unacceptable 0.1%

3 Steps–4.41% increase

2 Steps–2.94% increase

1 Step–1.47% increase

0 Steps–no increase

FDIC–

Bargaining

Unit and 

Non-Bargaining

Unit Employees

FDIC–

Executive

Managers and

Corporate 

Managers

SEC–

Senior Officers

2.9%

43.0%

47.2%

6.9%

SEC–

SK Employees

First process Second process

Source: GAO analysis of agency data.

(Jan.–Dec. 2005)

(Jan.–Dec. 2005)

(May 2005–

April 2006)

(Oct. 2004–

Sept. 2005)
Page 25 GAO-07-678 Financial Regulators

As shown in figures 1 and 2, the percentage of employees rated as poor 

performers at each agency was very small during the completed 

performance appraisal cycles we reviewed. Employees rated at below the 

successful and meets expectations rating levels accounted for less than 3 

percent of employees across the agencies.26 OTS had zero employees in the 

bottom two rating categories combined—all OTS employees received fully 

successful or higher ratings. Similarly at NCUA, no executives and 2.1 

percent of nonexecutives were rated below minimally successful. 

While the financial regulators rated very few employees as poor 

performers, all of the agencies have established procedures to deal with 

poor performers. When an employee does not perform up to a threshold 

standard for satisfactory performance, most agencies place the employee 

on a performance improvement plan or provide counseling for the 

employee, and the employee does not receive a performance-based 

increase at the end of the performance cycle. For example, OTS has 

addressed poor performance by working with the employee to improve his 

or her area of deficiency. An employee who receives a rating at the 

unacceptable level is placed on a performance improvement plan for a 

minimum of 90 days. Specifically, OTS policy advises supervisors to 

develop a performance improvement plan by identifying the performance 

areas in which the employee is deficient and the types of improvements, 

including specific work products and steps to be followed which the 

employee must complete to attain the fully successful performance level. 

In addition, according to OTS policy, the agency may provide the employee 

with closer supervision, or on-the-job or formal training. 

However, governmentwide, 29.7 percent of employees indicated in the 2006 

Office of Personnel Management (OPM) Federal Human Capital Survey 

that they agreed or strongly agreed that differences in performance within 

the work unit were recognized in a meaningful way. Positive responses to 

this question for the eight financial regulators who participated in the 

survey ranged from 24.9 percent for CFTC to 41.6 percent for OCC. None of 

these agencies had a majority of their employees provide positive 

responses to this question, and only three of the eight agencies had more 

than one third of their employees provide positive responses to this 

question. 

26Rating levels at the agencies that accounted for less than 3 percent of employees included 

the following categories: “unacceptable,” “unsatisfactory,” “unsuccessful,” “minimally 

acceptable,” “minimally successful,” “marginal,” and “does not meet expectations.”
Page 26 GAO-07-678 Financial Regulators

SEC Did Not Complete 

Performance Ratings for 

Senior Officers, Missing an 

Opportunity to Provide 

Valuable Feedback

While it may have been an isolated incident, for senior officers, SEC 

effectively did not make distinctions in rating their performance during the 

appraisal cycle we reviewed because the agency did not complete 

performance ratings for them in 2005. According to SEC officials, no funds 

were available for performance-based bonuses (which are normally 

dependent on performance ratings) during that assessment cycle. As a 

result, divisions performed assessments of senior officers, but the 

assessment process was not completed and their ratings were not signed 

by the Chairman for the October 1, 2004, to September 30, 2005, 

performance appraisal cycle. A recent SEC Inspector General report 

confirmed that senior officers in SEC’s Enforcement Division did not 

prepare performance review documents for the performance cycle that 

ended on September 30, 2005, and recommended that required steps of the 

senior officer performance appraisal process be conducted in accordance 

with Commission policy, even when merit increases are not awarded.27 All 

senior officers received annual across-the-board salary increases during 

that cycle. Conducting performance appraisals and making distinctions in 

performance are important not only for determining performance-based 

pay increases, but for providing feedback to help employees improve their 

performance and assess how their work contributed to achieving 

organizational goals. By not appraising their performance, SEC missed an 

opportunity to provide valuable feedback to senior officers.

Agencies Have Taken 

Various Actions to 

Seek to Maintain Pay 

and Benefits 

Comparability 

Financial regulators have hired external compensation consultants to 

conduct individual, formal comparability surveys, exchanged pay and 

benefits information, explored the feasibility of conducting a common 

survey, and adjusted pay and benefits to seek to maintain pay and benefits 

comparability. The majority of the financial regulators conducted pay 

comparability surveys that have included other financial regulators and in 

some instances, private-sector entities. To compare pay across agencies, 

consultants send questionnaires on behalf of the sponsoring agency and 

ask participating agencies to match the jobs based on the job descriptions 

provided. To compare benefits, consultants use various methods, such as 

side-by-side comparisons of benefits and calculation of total cost of 

benefits per employee. In addition to these surveys, human capital officials 

at the 10 financial regulators have formed an interagency group to 

27Securities and Exchange Commission, Office of the Inspector General, Enforcement 

Performance Management, Audit Report No. 423 (Feb. 8, 2007).
Page 27 GAO-07-678 Financial Regulators

exchange information and consult on topics such as updates on merit pay 

ranges and bonuses. However, agency officials told us that because many 

of the financial regulators conduct separate comparability surveys, their 

staffs have to respond to numerous and often overlapping inquiries, which 

can be inefficient. To begin addressing the inefficiencies of this process, the 

agencies formed a subcommittee in December 2006 to study the feasibility 

of conducting a common survey on pay and benefits. According to agency 

officials, the subcommittee also has discussed the feasibility of establishing 

a Web-based data system to make the most current pay and benefits 

information available to participating agencies. 

In the absence of a legislative definition of what constitutes comparability, 

agency officials told us that they use various methods to assess pay and 

benefits comparability after they have obtained relevant data from the 

other agencies. For example, FDIC has sought to set its total pay ranges 

(base pay plus locality pay) for specific occupations and grade levels within 

10 percent of the average of FIRREA agencies. FCA used the average 

market rate paid by other financial regulators as a benchmark. Finally, 

partly on the basis of the results of the comparability surveys and 

discussions among the agencies, the financial regulators have adjusted 

their pay and benefits policies in their efforts to seek to maintain 

comparability. For example, as a result of gaining pay flexibilities, CFTC 

implemented new pay ranges for its 2003 pay schedule, and increased base 

pay by 20 percent for all eligible employees to partially close the 25 percent 

gap between CFTC and FIRREA agencies. Appendix IV provides additional 

information on our analysis of individual agency actions.

While the regulators have taken actions to seek to maintain comparability 

in their pay and benefits, there are some variations in base pay ranges and 

benefit packages among the agencies. Figure 3 shows the base pay ranges 

(minimum and maximum) for the mission-critical occupations, excluding 

executives at the 10 agencies.28 As shown in the same figure, the actual 

average base pay among the 10 agencies also varies somewhat in relation to 

the agencies’ respective base pay ranges, which according to agency 

officials, could be affected by the average length of service of employees, 

28See appendix I for our criteria for selecting mission-critical occupations in our study. We 

excluded executives from the analysis of average actual pay and pay scale. In addition, with 

the exception of the Federal Reserve Board and OFHEO, which do not have separate base 

and locality pay, the base pay shown in figure 3 does not include locality pay percentages. 
Page 28 GAO-07-678 Financial Regulators

and the fact that some agencies tend to hire employees at certain grade 

levels.

Figure 3: Nonexecutive Minimum and Maximum Pay Ranges and Average Actual Pay for Mission-Critical Occupations by 

Regulator, 2006 

210000

Regulator

CFTC

FCA

FDIC

FHFB

NCUA

OCC

OTS

SEC

OFHEO

Base salary minium and maximum by occupationa

$153,731

143,552

160,910

140,372

87,810

177,600

152,747

110,594

NA

186,251

$45,810

63,906

42,777

52,182

45,570

41,100

43,384

60,567

64,040

67,106

$153,731

143,552

160,910

134,389

135,243

177,600

164,965

126,987

173,270

208,599

$30,234

73,114

42,777

42,075

60,865

33,000

31,888

33,033

40,120

51,175

$153,731

143,552

127,831

140,372

117,039

177,600

140,136

126,987

150,150

186,251

$30,234

63,906

27,580

74,371

52,686

56,000

31,888

33,033

64,040

84,094

$153,731

143,552

145,220

134,389

87,810

177,600

140,136

126,987

173,270

186,251

c d

b c

b

Federal

Reserve Board

Sources: GAO analysis of agency data for pay ranges and Central Personnel Data File data for actual pay.

Actual average base pay

$30,234

37,301

27,580

42,075

23,391

33,000

31,888

33,033

 

NA 

45,693

Examiner Attorney Accountant Economist

No separate base and locality pay
Page 29 GAO-07-678 Financial Regulators

a

The figure shows the minimum pay of the lowest level and the maximum pay of the highest level of an 

occupation for which agencies have an established occupation. Agencies may not currently have 

incumbents in each level of the occupation. The base pay ranges exclude locality pay except for the 

Federal Reserve Board and OFHEO. 

b

The actual average base pay data in CPDF did not segregate CFTC’s examiners and investigators or 

OFHEO’s examiners and financial analysts because these occupations are assigned the same OPM 

job series number. Therefore, we did not separately present the actual average pay for these four 

occupations at the two agencies. The combined actual average pay for examiners and investigators is 

$83,501 at CFTC; and $131,294 for examiners and financial analysts at OFHEO.

CFTC

FCA

FDIC

FHFB

NCUA

OCC

OTS

SEC

OFHEO

$30,234

42,675

21,400

87,887

45,570

41,100

37,193

27,333

40,120

67,106

$153,731

143,552

160,910

134,389

135,243

177,600

116,872

104,329

173,270

186,251

$153,731

NA

145,220

NA

117,039

NA

NA

104,329

129,210

NA

$30,234

73,114

27,580

32,257

45,570

41,100

31,888

27,333

40,120

67,106

$93,005

143,552

145,220

134,389

150,290

177,600

127,976

104,329

173,270

186,251

$130,697

NA

160,910

NA

150,150

NA

NA

104,329

173,270

NA

$

NA 

NA 

NA 

NA 

41,100

NA 

27,333

NA 

NA 

$

NA

NA

NA

NA

177,600

NA

119,794

NA

NA b c

c d

Federal

Reserve

Board

Information

technology specialist Auditor Financial analyst Investigator Business specialist Regulator

$30,234

NA 

35,548

NA 

70,223

NA 

NA 

27,333

54,450

NA 

$30,234

NA 

62,619

NA 

60,865

NA 

NA 

27,333

64,040

NA 

NA NA b
Page 30 GAO-07-678 Financial Regulators

c

The base pay ranges shown for the Federal Reserve Board and OFHEO reflect the agencies’ total pay 

ranges because Washington D.C., is the agencies’ only duty station.

d

The actual average base pay data are provided by the Federal Reserve Board because CPDF does 

not contain data for the Board. 

Because each financial regulator sets its own locality pay percentage based 

on its respective policies, locality pay percentages often differ from those 

that OPM sets for General Schedule employees (with the exception of 

CFTC) and vary among agencies for the same duty station. For example, in 

New York City, the OPM locality pay percentage is 22.97 percent but the 

regulators’ locality pay percentages range from 21.19 at FDIC and FHFB to 

33.20 percent at OTS. Table 2 shows the locality pay percentages for OPM 

and for the eight financial regulators that have locality pay percentages for 

selected cities. 

Table 2: Selected OPM Locality Pay Percentages Compared to Financial Regulators’ Locality Pay Percentages, Fiscal Year 2006

Source: GAO analysis of agency data.

Note: Washington D.C. is the Federal Reserve Board’s and OFHEO’s only duty station, thus the 

agencies do not have separate locality pay percentages. For the other agencies, N/A indicates 

localities where they had no office. 

a

 Locality includes Braintree, Mass.

b

 Locality includes Sunrise, Fla.

c

 Locality includes Bloomington, Minn.

d

 Locality includes McLean, Va.

Locality OPM CFTC OCC OTS FDIC FCA FHFB NCUA SEC

Atlanta, Ga. 15.10% N/A N/A 6.50% 7.43% N/A 7.43% 8.06% 11.13%

Boston, Mass. 19.99 N/A 13.00 17.50 22.67 a N/A 22.67 18.55 24.29

Chicago, Ill. 21.15 21.15 8.00 11.20 16.20 N/A 16.20 22.26 21.62

Dallas, Tex. 16.39 N/A 3.00 N/A 9.20 6.50 9.20 11.25 12.92

Denver, Colo. 19.49 N/A 8.00 2.30 N/A 10.50 N/A 18.27 17.72

Los Angeles, Calif. 23.18 N/A 18.00 18.10 19.28 N/A N/A 25.70 24.35

Miami, Fla. 17.84 N/A 3.00 6.80 11.33 b N/A N/A 15.97 15.02

Minneapolis, Minn. 17.31 17.31 3.00 7.30 11.76 8.20c N/A 13.23 N/A

New York City, N.Y. 22.97 22.97 23.00 33.20 21.19 N/A 21.19 23.61 24.92

San Francisco, Calif. 28.68 N/A 28.00 46.70 32.41 N/A 32.41 36.43 25.14

Seattle, Wash. 17.93 N/A 8.00 15.80 13.93 N/A 13.93 14.52 N/A

Washington, D.C. 17.50 17.50 8.00 25.90 13.30 15.20d 16.30 12.87 17.50
Page 31 GAO-07-678 Financial Regulators

The benefits that the 10 financial regulators offered also varied, which we 

discuss in detail in appendix IV. For example, half of the regulators offer 

their employees 401(k) retirement savings plans with varying employer 

contributions in addition to offering the governmentwide Federal Thrift 

Saving Plan (except for the Federal Reserve Board). According to agency 

officials, factors such as the year an agency first became subject to 

comparability provisions, budget constraints, the needs and preferences of 

different workforces, and ways to attract and retain workforces play a role 

in compensation decisions and contribute to the variations in pay ranges 

and benefits. Moreover, agency officials emphasized that it was not their 

goal to have identical pay and benefits packages; rather, they considered 

pay and benefits as a total package when seeking to maintain pay and 

benefits comparability and when setting pay policies aimed at recruiting 

and retaining employees. 

Few Employees Have 

Moved among the 

Financial Regulators, 

Most Resigned from 

Federal Employment 

While the total number of financial regulatory employees resigning from 

federal employment between fiscal years 1990 and 2006 generally declined, 

there was no clear trend among the number who moved to another 

financial regulator. As shown in figure 4, the number of employees leaving 

one federal regulator for another declined from the previous fiscal year in 

10 of the 16 years and increased from the previous fiscal year in the other 6 

years. Figure 4 also shows the percentage of financial regulatory 

employees who went to another financial regulator, went to other federal 

agencies, and resigned from federal employment, and the total number of 

financial regulatory employees during this period. Of all the employees 

who left their financial regulatory agency voluntarily (moved to another 

financial regulator or executive branch agency, or resigned) from fiscal 

year 1990 through fiscal year 2006, the vast majority—86 percent (13,433)—

of the 15,627 employees leaving the regulators voluntarily (i.e., moved or 

resigned), resigned from the federal government. The number of employees 

who moved to another financial regulator ranged from a low of 16 of 1,362 

who moved or resigned in fiscal year 1997 to a high of 97 of 1,229 who 

moved or resigned in fiscal year 1991. The total number of financial 

regulator employees was 15,400 and 19,796 during those 2 years, 

respectively.29 Similar lows were also experienced in 1996 and 2003. Some 

agency officials told us that they believe that the FIRREA comparability 

provision and similar provisions in subsequent laws applicable to financial 

29The analysis of employee movement does not include data for the Federal Reserve Board, 

because the CPDF does not include data for the agency. 
Page 32 GAO-07-678 Financial Regulators

regulators have been effective in ensuring that regulators’ pay and benefits 

are generally comparable among the 10 agencies, which probably helps 

minimize employee movement among financial regulatory agencies. Of the 

financial regulator employees who moved or resigned, the percentage of 

those who resigned from federal employment fluctuated slightly over the 

period, ranging from a low of 73.7 percent in fiscal year 2003 to a high of 

94.8 percent in fiscal year 1996. 
Page 33 GAO-07-678 Financial Regulators

Figure 4: Attrition among Financial Regulators, Fiscal Years 1990–2006

Note: This figure does not include data for the Federal Reserve Board.

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

42

39

41

19

27

36

34

35

47

16

18

36

23

32

54

97

62

650

459

415

580

661

944

711

889

1,362

1,373

1,188

1,199

1,105

1,189

1,229

1,100

13,817

573 13,619

14,294

14,050

14,352

15,029

15,144

15,446

15,204

15,400

16,931

18,119

19,232

20,156

20,440

19,796

18,196

6.5

8.9

4.6

4.7

5.5

3.6

4.9

5.3

1.2

1.3

3.0

1.9

2.9

4.5

7.9

5.6

77.7

79.7

73.7

77.2

77.9

84.5

81.9

83.1

91.8

94.8

89.4

94.1

92.2

85.9

81.7

% % 84.1%

15.9

6.8 12.2 81.0

11.3

21.7

18.1

16.6

11.9

13.2

11.6

7.1

3.9

7.6

4.0

4.9

9.6

10.4

10.3

Number moving to 

other financial

regulators

Fiscal

year Total moving

or resigning

Total

financial

regulator

Percentage breakdown by destination employees

Financial regulator employees who moved or resigned

Employees moving to other financial regulators

Employees moving to other federal agencies

Employees resigning (does not include retirements)

Total employees moving or resigning

Source: GAO analysis of CPDF data.
Page 34 GAO-07-678 Financial Regulators

The movement of mission-critical employees among financial regulators 

also did not reveal a discernible trend. For the number of employees who 

moved to another financial regulator from fiscal year 1990 through fiscal 

year 2006, see table 10 in appendix V. The numbers ranged from no 

movement for 7 of the 11 occupational categories (accountants, auditors, 

business specialists, economists, financial analysts, investigators, and 

information technology (IT) specialists) in at least 1 of the fiscal years we 

reviewed to a high of 37 employees (38.1 percent of all those who moved 

that fiscal year) for the “all other” occupational category in fiscal year 

1991.30 During this period (fiscal years 1990 to 2006), some occupational 

categories experienced very little movement. For example, fewer 

accountants, auditors, business specialists, and investigators moved than 

employees in the other categories. In contrast, examiners had the largest 

number of employees moving among financial regulators in 8 of the 17 

years, including the 3 most recent years for which data were available. The 

average number of employees in mission-critical occupations moving 

among the 9 financial regulators from fiscal year 1990 through fiscal year 

2006 ranged from 0.1 for investigators to 11.7 for examiners. See appendix 

V for additional data on employee movement.

For those employees that did not move to another financial regulator, we 

could not determine in all cases where the employees moved because 

CPDF, the most complete data set available with federal employment 

information, does not include information on employment outside 

executive branch agencies. We were able to identify those employees that 

went to another federal agency. These numbers ranged from a low of 48 in 

fiscal year 1994 to a high of 128 in fiscal year 1991, higher than the number 

of employees who moved to another financial regulator, which was 23 in 

fiscal year 1994 and 97 in fiscal year 1991. Officials from the 9 agencies told 

us that they do not track the employment of their employees after the 

employees leave their agencies. Further, they said that their employees 

generally sought employment outside the federal government, including 

the private sector and state and local government, but that their main 

competitors were private-sector entities. 

30The “all other” category combines specialists in occupations such as human resources 

management, administration, clerical, management and program analysis, financial 

administration, and paralegal work. The three occupational categories with employee 

movement were attorney, examiner, and supervisor.
Page 35 GAO-07-678 Financial Regulators

Conclusions Like other federal agencies, the experiences of the financial regulators 

illustrate the challenges inherent in establishing well-functioning, 

performance-based pay systems and that these systems are works in 

progress that are constantly evolving. These regulators have taken various 

approaches to revise their performance management systems and 

introduce performance-based pay. Although the regulators have 

incorporated many of the key practices for effective performance 

management systems, opportunities exist for a number of them to make 

improvements as they continue to refine their systems. Specifically, some 

regulators have opportunities in the areas of strengthening safeguards to 

enhance transparency and fairness and making meaningful distinctions in 

performance. As some regulators develop new systems or revise their 

existing systems, they have an opportunity to build in aspects of the key 

practices, such as improving transparency by communicating the overall 

results of performance appraisal rating and performance-based pay 

increase decisions to all employees to help employees understand how 

they performed relative to other employees in their organization, while 

protecting individual confidentiality. For regulators that negotiate with 

unions, there are also opportunities to work together to accomplish this. 

SEC has some additional opportunities to pursue improvements in specific 

aspects of its performance management system, which it is in the process 

of revamping. For example, SEC can establish and communicate to 

nonexecutive employees using the new system clear criteria for making 

performance rating and pay increase decisions. Finally, while it may have 

been an isolated incident, by not completing performance assessments of 

senior officers in the 2005 performance appraisal cycle we reviewed, SEC 

missed an opportunity for two-way feedback and assessments of individual 

and organizational progress toward organizational goals. While funding 

circumstances specific to that appraisal cycle contributed to this situation, 

in the future it will be important to complete assessments regardless of the 

availability of funding for increases. 

The agencies have taken a variety of actions in seeking to maintain pay and 

benefits comparability. While we did find some variation in base pay 

ranges, locality pay percentages, actual average pay, and benefits among 

the agencies, we found that a number of reasons could contribute to the 

variation, including the following: regulators were granted flexibility under 

Title V and subject to comparability requirements at varying times, pay and 

benefits are considered comprehensively in seeking comparability, the 

average length of service of employees, and where employees are located. 
Page 36 GAO-07-678 Financial Regulators

While pay and benefits comparability cannot be precisely determined, all 

the agencies are working to maintain comparability in pay and benefits. 

One recent initiative—studying the feasibility of conducting a common 

survey on pay and benefits—should help to increase the efficiency of this 

effort. In addition, given the relatively small amount of employee 

movement among federal regulators, the variation in pay, benefits, and 

locality pay percentages in some locations across the regulators does not 

appear to be encouraging large numbers of employees to move among 

financial regulators. This may be an indication that the comparability 

provisions of FIRREA and other pertinent legislation have been working as 

intended. Moreover, from fiscal years 1990 through 2006, the agencies’ 

attrition rates have trended downward indicating that a smaller percentage 

of employees were leaving.

Recommendations for 

Executive Action

The Chairman of the Board and Chief Executive Officer of the Farm Credit 

Administration, the Chairman of the Federal Housing Finance Board, and 

the Director of the Office of Federal Housing Enterprise Oversight should

• communicate the overall results of the performance appraisal and pay 

increase decisions to all employees agencywide while protecting 

individual confidentiality.

The Chairman of the National Credit Union Administration and the 

Chairman of the Commodity Futures Trading Commission should

• work with unions to communicate the overall results of the 

performance appraisal and pay increase decisions to all employees 

agencywide while protecting individual confidentiality. 

The Chairman of the Securities and Exchange Commission should

• communicate clearly the criteria for making performance rating and pay 

increase decisions to nonexecutive employees 

• work with the union to communicate the overall results of the 

performance appraisal and pay increase decisions to all employees 

agencywide while protecting individual confidentiality and

• assess senior executives’ performance at the end of the performance 

appraisal cycle regardless of the amount of funding available for 

performance-based pay increases. 
Page 37 GAO-07-678 Financial Regulators

Agency Comments and 

Our Evaluation

We provided drafts of this report to the Chairman, Commodity Futures 

Trading Commission; Chairman of the Board and Chief Executive Officer, 

Farm Credit Administration; Chairman, Federal Deposit Insurance 

Corporation; Chairman, Federal Housing Finance Board; Chairman, Board 

of Governors of the Federal Reserve System; Chairman, National Credit 

Union Administration; Comptroller of the Currency, Office of the 

Comptroller of the Currency; Director, Office of Federal Housing 

Enterprise Oversight; Director, Office of Thrift Supervision; and Chairman, 

Securities and Exchange Commission; for review and comment. 

We received written comments from six of the agencies. See appendixes VI, 

VII, VIII, IX, X, and XI for letters received from CFTC, the Federal Reserve 

Board, FHFB, NCUA, OFHEO, and SEC. These six, along with the other 

four agencies, also provided clarifying and technical comments, which we 

incorporated as appropriate. 

The agencies generally agreed with our recommendations. With respect to 

the recommendation to communicate the overall results of the 

performance appraisal and pay increase decisions on an agency-wide basis, 

CFTC, FCA, FHFB, NCUA, OFHEO, and SEC indicated that they plan to 

implement the recommendation. In describing specific actions, the 

executive director of CFTC explained that the agency has already 

discussed working with the unions to communicate overall results of 

performance appraisal and pay decisions across the agency as part of the 

development of their new performance management and pay-forperformance systems. The Chief Human Capital Officer of FCA stated that 

the agency plans to communicate the overall results of the 2006 

performance appraisal and 2007 pay increase decisions to FCA employees 

by the end of June 2007. The Executive Director of NCUA explained that 

sharing overall information on ratings and pay increase decisions with all 

employees is one of the issues being negotiated as part of the ongoing 

negotiations over pay and benefits with the National Treasury Employees 

Union, and stated that the agency’s proposal to the union provides for this 

type of transparency. The Executive Director of SEC agreed with the report 

findings and stated that SEC has established a new branch within the Office 

of Human Resources to oversee performance-related issues and has 

launched a new pilot performance management system that will address 

the recommendations. Finally, the Acting Director of FHFB and the Chief 

Human Capital Officer of OFHEO also stated that their respective agencies 

will implement the recommendation.
Page 38 GAO-07-678 Financial Regulators

We will send copies of this report to the appropriate congressional 

committees; the Chairman, Commodity Futures Trading Commission; 

Chairman of the Board and Chief Executive Officer, Farm Credit 

Administration; Chairman, Federal Deposit Insurance Corporation; 

Chairman, Federal Housing Finance Board; Chairman, Board of Governors 

of the Federal Reserve System; Chairman, National Credit Union 

Administration; Comptroller of the Currency, Office of the Comptroller of 

the Currency; Director, Office of Federal Housing Enterprise Oversight; 

Director, Office of Thrift Supervision; Chairman, Securities and Exchange 

Commission; and other interested parties. We will make copies available to 

others upon request. The report will also be available at no charge on our 

Web site at http://www.gao.gov.

If you or your staff have any questions regarding this report, please contact 

Orice M. Williams at (202) 512-8678 or williamso@gao.gov or Brenda Farrell 

at (202)512-5140 or farrellb@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. GAO staff who made major contributions to this report are 

listed in appendix XII.

Orice M. Williams, Director

Financial Markets and Community Investment

Brenda Farrell, Acting Director

Strategic Issues
Page 39 GAO-07-678 Financial Regulators

List of Congressional Requesters

The Honorable Barney Frank

Chairman

The Honorable Spencer Bachus

Ranking Member

Committee on Financial Services

House of Representatives

The Honorable Luis V. Gutierrez

Chairman

Subcommittee on Domestic and International Monetary

Policy, Trade, and Technology

Committee on Financial Services

House of Representatives

The Honorable Paul E. Kanjorski

Chairman

Subcommittee on Capital Markets,

Insurance, and Government Sponsored Enterprises

Committee on Financial Services

House of Representatives

The Honorable Bernard Sanders

United States Senate
Page 40 GAO-07-678 Financial Regulators

Appendix I

Objectives, Scope, and Methodology AAppenednxidexiIs

The objectives of this report were to (1) review how the performancebased pay systems of 10 federal financial regulatory agencies are aligned 

with six key practices for effective performance management systems, (2) 

review actions these 10 agencies have taken to assess and implement 

comparability in compensation, and (3) review the extent to which 

individuals in selected occupations have moved between or left any of the 

agencies. These agencies are the Commodity Futures Trading Commission 

(CFTC), the Farm Credit Administration (FCA), the Federal Deposit 

Insurance Corporation (FDIC), the Federal Housing Finance Board 

(FHFB), the Board of Governors of the Federal Reserve System (the 

Federal Reserve Board), the National Credit Union Administration 

(NCUA), the Office of the Comptroller of the Currency (OCC), the Office of 

Federal Housing Enterprise Oversight (OFHEO), the Office of Thrift 

Supervision (OTS), and the Securities and Exchange Commission (SEC). 

To address our first objective, we analyzed documents on the regulators’ 

performance management and pay systems, including guidance, policies, 

and procedures on the systems; performance planning and appraisal forms; 

union contracts and agreements; training materials; internal evaluations of 

systems; and materials used to communicate with employees about the 

systems. We also reviewed documents assessing the agencies’ systems, 

including results from the 2006 Federal Human Capital Survey conducted 

by the Office of Personnel Management (OPM), recent human resources 

operations audits performed by OPM, and relevant material from agencies’ 

offices of inspector general. 

We also interviewed key human resources officials at each agency, as well 

as officials from other functional areas knowledgeable about each agency’s 

performance-based pay practices. In addition, we interviewed employees at 

the agencies who served as members of employee groups. At six of the 

agencies, the employees we spoke with were union representatives. 

Specifically, employees at FDIC, OCC, NCUA, and SEC are represented by 

the National Treasury Employees Union, and OTS headquarters staff and 

CFTC staff at two regional offices are represented by the American 

Federation of Government Employees. Employees at FCA, the Federal 

Reserve Board, FHFB, and OFHEO did not have a union; at these agencies 

we spoke with employees who served on employee committees or working 

groups. 

In addition, we examined small, select sets of individual performance plans 

for employees, which outline the annual performance expectations for 

employees. The selection of these performance plans was not intended to 
Appendix I

Objectives, Scope, and Methodology

Page 41 GAO-07-678 Financial Regulators

allow us to make generalizations about all performance plans at the 

agencies, and we have used information from the plans for illustrative 

purposes only. The performance plans we received were selected by 

agency officials based on our request for a mix of occupations and grade 

levels at each agency. The smallest number of performance plans we 

examined from an agency was one, in a case where the performance plans 

for all employees are completely standardized. The largest number of plans 

we reviewed from an agency was 32. The individual performance plans we 

examined pertained to each agency’s last completed performance appraisal 

cycle when we began this review. Table 3 shows the appraisal cycle by 

agency.

Table 3: Performance Appraisal Cycle by Agency

Source: Various regulators.

Finally, we analyzed data from each agency on performance ratings and 

performance-based pay awarded to employees as well as aggregate data on 

all types of pay increases at each agency not linked to performance ratings. 

We used these data to calculate the Spearman rank correlation coefficient 

to show the strength of the relationship between employee performance 

ratings and the associated performance-based percentage pay increases at

Agency Performance appraisal cycle

CFTC July 1, 2005 to June 30, 2006

FCA October 1, 2004 to September 30, 2005

FDIC January 1, 2005 to December 31, 2005

Federal Reserve Board October 1, 2004 to September 30, 2005

FHFB October 1, 2005 to September 30, 2006

NCUA January 1, 2005 to December 31, 2005

OCC October 1, 2004 to September 30, 2005

OFHEO April 1, 2005 to March 31, 2006

OTS January 1, 2005 to December 31, 2005

SEC:

for senior officers October 1, 2004 to September 30, 2005

for all other employees May 1, 2005 to April 30, 2006
Appendix I

Objectives, Scope, and Methodology

Page 42 GAO-07-678 Financial Regulators

each agency.1 In computing the correlation coefficients, we noted that a 

few agencies used a table or procedure that specified particular pay 

increases corresponding to specific ratings. Taken in isolation, the use of 

the table or procedure would be expected to produce a perfect correlation, 

i.e., +1.0. However, other aspects of these agencies’ systems contributed to 

the resulting coefficients being less than +1.0. For example, at one agency, 

employees with rating scores below a certain threshold were not eligible 

for any pay increase. While these employees may have had different rating 

scores, none of them received a pay increase, which contributed to a 

coefficient that was less than perfect. Other mechanistic factors in these 

agencies’ systems, such as adjusting or changing the specified percentage 

pay increase based on the grade level or current salary of the employee, 

also had the effect of producing a less than perfect coefficient at these 

agencies. Given the influence that these procedural but nondiscretionary 

variations may have had on the resulting coefficients at these agencies, the 

coefficients are primarily useful in their overall demonstration of the 

positive linkage between ratings and pay increases at all the agencies, and 

the range of coefficients that occurs. The magnitude of the coefficients, 

however, is not sufficient for ranking the agencies or making other types of 

comparisons.

We also analyzed agency data on performance ratings to determine the 

distribution of employee performance ratings at each agency. All data were 

provided to us by agency officials, and pertained to the performance 

appraisal cycles noted in table 3.

1

The performance appraisal and pay systems at FDIC and SEC were sufficiently different 

from those of the other eight agencies that a correlation coefficient would not be a useful 

descriptor of the relationship between ratings and pay increases at these two agencies. Both 

FDIC and SEC use two-phase performance management systems that preclude the 

meaningful use of a single correlation coefficient. Neither the first or second processes in 

their systems are sufficiently comparable to the multilevel performance rating scales and 

pay increase determinations used at the other financial regulators. In the first process at 

FDIC and SEC, almost all employees were rated as “acceptable” on what was essentially a 

two-level, “acceptable/unacceptable” rating scale. The lack of variation in performance 

ratings given in the first process would show little association with pay increases, and 

computing a correlation for this step would yield a coefficient at or around zero. In the 

second process, which was not considered to be a performance rating at these agencies, 

employees were assigned to performance groups at FDIC or awarded steps at SEC that were 

associated with specified percentage increases in pay. Computing a correlation between 

group assignment or steps awarded and percentage of pay increase would yield a perfect 

correlation since group or step assignment was synonymous with a specific percentage 

increase in pay.
Appendix I

Objectives, Scope, and Methodology

Page 43 GAO-07-678 Financial Regulators

To address our second objective, we first analyzed the content of 

compensation comparability provisions in the agencies’ laws and related 

legislative histories. We reviewed the most recent pay and benefits surveys 

conducted by external compensation consultants for these agencies, 

obtained agency pay and benefits data, and analyzed actual pay data from 

CPDF. In addition, we interviewed agency officials about their experience 

with these surveys and the agencies’ informal interactions to assess pay 

comparability and to determine the feasibility of conducting a common 

survey.

To report on the pay ranges for non-executive employees in selected 

occupations, we analyzed the base pay data provided to us for missioncritical occupations at nine of the agencies in our review. We selected the 

mission critical occupations by: (1) identifying nonclerical and nonbluecollar occupations with 45 or more employees in at least one financial 

regulatory agency and (2) vetting this list with the 10 agencies.2

 The 

agencies provided us with pay range information as set forth in each 

agency’s pay policies as of September 2006 for every job title under each 

occupational category, including jobs with no incumbents at the time the 

agencies reported the data to us. 

To report on the actual average base pay of employees in the selected 

occupations, we analyzed actual pay data from CPDF for fiscal year 2006. 

Because the CPDF does not include data for all agencies, the Federal 

Reserve Board provided us with actual pay data for our analysis of its 

employees' actual average pay for fiscal year 2006. To show the financial 

2

OPM’s six occupational categories are Professional, Administrative, Technical, Clerical, 

Other White-Collar, and Blue Collar, collectively known as “PATCOB.” When we sent the list 

of mission critical occupations to the agencies, we listed the occupational title and asked 

the agency to identify the OPM job series number they used for that occupation. For some 

occupations, all agencies used the same job series (for example, 0905 for attorneys). For 

other occupations, some agencies used different job series for the same or similar 

occupation (for example, agencies used several agency-unique job series for “examiners” 

such as 1831, 0580, and 0570). Two agencies (CFTC and OFHEO) placed employees in the 

same job series (1801 for CFTC and 0501 for OFHEO) into two different occupations 

(examiners and investigators, and examiners and financial analysts, respectively). In both 

cases, we placed all employees in the examiner occupation because the CPDF does not 

facilitate separating employees with the same job series into separate occupations. For a 

few occupations, some agencies used an OPM job series number that we did not expect (for 

example, OFHEO used 0301 for information technology specialists and FCA used 1101 for 

examiners). When we analyzed CPDF data, we used the occupational titles and job series 

numbers the agencies provided to us. Executives were not included in the pay analyses. We 

excluded executives from the analysis of average actual pay and pay scale, because we 

wanted to focus on mid-level management. 
Appendix I

Objectives, Scope, and Methodology

Page 44 GAO-07-678 Financial Regulators

regulators’ locality pay percentages and general schedule employees’ 

locality pay percentages, we selected the cities where four or more 

financial regulators had duty stations in fiscal year 2006. We obtained fiscal 

year 2006 locality pay percentages information from the financial 

regulators and general schedule locality pay percentages from the OPM 

Web site. To report on the benefits offered by the agencies, we obtained 

and analyzed data from each agency that included a list of benefits the 

financial regulators offered as of September 2006 and brief descriptions of 

each benefit. We also interviewed agency officials about the factors that 

affect the actual average base pay, and how each agency sets its locality 

pay percentage. 

To address our third objective, we analyzed movement data from CPDF for 

fiscal years 1990 to 2006, the most recent available data as of December 

2006. For each fiscal year, we identified the number of employees in 

selected mission-critical occupations at a financial regulator who (1) 

moved to another financial regulator, (2) moved to other federal agencies, 

and (3) resigned from federal employment. We identified those who moved 

from one financial regulatory agency to another by identifying employees 

who had a CPDF separation code for a voluntary transfer and who also had 

a CPDF accession code from another financial regulatory agency within 25 

days of the transfer out. Also, for each mission-critical occupation, we 

examined the number of financial regulator employees who moved to 

another financial regulator in each fiscal year and the average number of 

employees who moved among the nine financial regulators over the 16 

years of our review. Our analysis of supervisors included executives, who 

constituted 1 to 2 percent of all supervisors who moved to another financial 

regulator. We also included all other agency occupations that were not 

classified as “mission-critical occupations” in an “all other” category, which 

includes occupations such as specialists in human resources management, 

administration, clerical, management and program analysis, blue collar 

occupations, financial administration, and paralegal work. 

We did not include the Federal Reserve Board in our analysis of the 

movement of financial regulator employees because CPDF does not 

include data on the Federal Reserve Board. Federal Reserve Board officials 

told us that data on employee movement for fiscal years 1990 to 1996 are 

not readily accessible. The agency provided us some data for fiscal years 

1997 to 2005, including data on employees who transferred, resigned, were 

fired, were subject to a reduction in force, or otherwise separated, and the 

agency’s total number of employees, but was unable to identify whether 

their employees left for another financial regulator. Because the data the 
Appendix I

Objectives, Scope, and Methodology

Page 45 GAO-07-678 Financial Regulators

agency provided were not comparable with the CPDF data we used for the 

other financial regulators, we did not include the Federal Reserve Board in 

our analysis. We also did not include information on the employment of 

financial regulatory employees after they left federal employment because 

CPDF does not include data on employment outside some agencies and 

officials told us that they do not track the employment of their employees 

after the employees leave their agencies.3

We assessed the reliability of the various sets of data used in our study. To 

assess the reliability of the performance and pay increase data provided by 

the agencies, we conducted various inspections and electronic testing of 

the data for reasonableness and the presence of any obvious or potential 

errors in accuracy and completeness. We also reviewed related agency 

documentation, interviewed agency officials knowledgeable about the 

data, and brought to the attention of these officials any concerns or 

discrepancies we found with the data for correction or updating. Based on 

the results of these procedures, we believe the data are sufficiently reliable 

for use in the analyses presented in this report. We did not independently 

verify the pay and benefits data we received from the agencies but consider 

these data sufficiently reliable for the illustrative purpose of our review. 

Based on our data reliability testing of CPDF data, we believe the CPDF 

data are sufficiently reliable for this review. When analyzing employee 

movement using CPDF data, we found exceptions from standard personnel 

procedures, such as employees with a transfer-out code but with an 

accession code in the hiring agency that was not a transfer-in code, or 

employee records with transfer-out and transfer-in dates that exceeded 3 

calendar days. We also found duplicate separation or accession records for 

the same individual on the same day. We deleted one of the duplicate 

records. We also found cases where an individual had two separation 

actions on the same day but they were different types of actions (e.g., a 

transfer out and a resignation). Because we could not determine which 

separation action was the correct one, we deleted both records. However, 

these types of data problems represented less than one-tenth of 1 percent 

of the data used. As a result, we concluded that the data were sufficiently 

3

We were not able to always find a transfer-in personnel action to match a transfer-out 

personnel action within the time frames stipulated for transfers. Some transfer-in personnel 

actions that we did not find in fiscal year 1990 could be due to the fact that the transfer-out 

personnel action occurred in fiscal year 1989. Similarly, some of the transfer-out personnel 

actions in fiscal year 2006 for which we did not find a matching transfer-in personnel action 

could be due to the fact that they occurred in fiscal year 2007. 
Appendix I

Objectives, Scope, and Methodology

Page 46 GAO-07-678 Financial Regulators

reliable to show the magnitude of movement between financial regulatory 

agencies, to other federal agencies, and to nonfederal employers.

We conducted our work from February 2006 through June 2007 in 

accordance with generally accepted government auditing standards. 
Page 47 GAO-07-678 Financial Regulators

Appendix II

Information on Agencies ApendxiI

Table 4: Agency Information

Agency Mission

Number of 

employeesa Fundingb

Employee 

representation

Performance-based 

pay

Commodity Futures 

Trading Commission 

(CFTC)

To protect market users and 

the public from fraud, 

manipulation, and abusive 

practices related to the sale 

of commodity and financial 

futures and options, and to 

foster open, competitive, and 

financially sound commodity 

futures and option markets.

446 Appropriated The American 

Federation of 

Government 

Employees 

represents 

employees in 

CFTC’s Chicago 

and New York 

offices only.

In October 2006, CFTC 

began transitioning to a 

new performancebased pay system that 

will be fully 

implemented beginning 

in July 2007.c

Farm Credit 

Administration (FCA)

To promote a safe, sound, 

and dependable source of 

credit and related services 

for agriculture and rural 

America.

248 Nonappropriatedd FCA is not 

unionized. FCA 

has an employee 

council. 

Performance-based 

pay began in 1993; the 

system has had some 

revisions since its 

inception.

Federal Deposit 

Insurance Corporation 

(FDIC)

To maintain stability and 

public confidence in the 

nation’s financial system by 

insuring deposits, examining 

and supervising financial 

institutions, and managing 

receiverships.

4328 Nonappropriated The National 

Treasury 

Employees Union 

has the right to 

bargain over 

employees’ pay 

and benefits at 

FDIC. 

Performance-based 

pay began in 1998. 

FDIC has essentially 

two pay and 

performance 

management systems -

- one that applied to 

senior managers, and 

one that applied to 

bargaining unit 

employees as well as 

nonbargaining unit 

employees.e

Federal Housing 

Finance Board (FHFB)

To ensure that the 12 federal 

home loan banks are safe 

and sound so they serve as a 

reliable source of liquidity 

and funding for the nation’s 

housing finance and 

community investment 

needs.

122 Nonappropriated FHFB is not 

unionized. FHFB 

has an employee 

working group.

The performancebased pay system 

began in the mid 

1990s; the system has 

been slightly revised 

since its inception.

Board of Governors of 

the Federal Reserve 

System 

To foster the stability, 

integrity, and efficiency of the 

nation’s monetary, financial, 

and payment systems so as 

to promote optimal 

macroeconomic 

performance. 

1855 Nonappropriated The Board is not 

unionized. The 

Board has an 

employee 

representative 

committee.

The performancebased pay system 

began in 1989; the 

system has been 

slightly revised since its 

inception.
Appendix II

Information on Agencies 

Page 48 GAO-07-678 Financial Regulators

National Credit Union 

Administration (NCUA)

To facilitate the availability of 

credit union services to all 

eligible consumers, 

especially those of modest 

means, through a regulatory 

environment that fosters a 

safe and sound federally 

insured credit union system.

919 Nonappropriated The National 

Treasury 

Employees Union 

has the right to 

bargain over the 

impact and 

implementation of 

changes made to 

NCUA’s 

performance 

management 

system.

The performancebased pay system 

began in 1991.

Office of the 

Comptroller of the 

Currency (OCC) 

U.S. Department of the 

Treasury

The OCC was created by 

Congress to charter national 

banks, to oversee a 

nationwide system of 

banking institutions, and to 

assure that national banks 

are safe and sound, 

competitive and profitable, 

and capable of serving in the 

best possible manner the 

banking needs of their 

customers.

2908 Nonappropriated The National 

Treasury 

Employees Union 

has the right to 

bargain over the 

impact and 

implementation of 

changes made to 

OCC’s 

performance 

management 

system, but not 

over employee pay 

and benefits.

Performance-based 

pay began in 1981; the 

current performance 

management system 

began in 2001, 

although some 

revisions have been 

made since then.

Office Of Federal 

Housing Enterprise 

Oversight (OFHEO)

To promote housing and a 

strong economy by ensuring 

the safety and soundness of 

Fannie Mae and Freddie Mac 

and fostering the strength 

and vitality of the nation’s 

housing finance system.

204 Nonappropriatedd OFHEO is not 

unionized. OFHEO 

has established an 

ad hoc employee 

working group. 

Performance-based 

pay has existed since 

the agency’s inception 

in 1992. 

Office of Thrift 

Supervision (OTS)

U.S. Department of the 

Treasury

To supervise savings 

associations and their 

holding companies in order 

to maintain their safety and 

soundness and compliance 

with consumer laws, and to 

encourage a competitive 

industry that meets 

America's financial services 

needs.

956 Nonappropriated The American 

Federation of 

Government 

Employees 

represents some 

employees in 

OTS’s 

Washington, D.C., 

office only.

Performance-based 

pay began in 1991.

Securities and 

Exchange Commission 

(SEC)

To maintain fair, orderly, and 

efficient securities markets, 

facilitate capital formation, 

and protect investors. 

3488 Appropriated The National 

Treasury 

Employees Union 

represents twothirds of SEC 

employees.

Performance-based 

pay began in 2002. 

(Continued From Previous Page)

Agency Mission

Number of 

employeesa Fundingb

Employee 

representation

Performance-based 

pay
Appendix II

Information on Agencies 

Page 49 GAO-07-678 Financial Regulators

Source: Various regulators

a

Employment figure for the Federal Reserve Board is from December 2006 and includes all regular 

employees; employment figures for all other agencies are for career employees and come from the 

CPDF as of September 2006.

b

Some financial regulators receive funding through appropriations from Congress while others are 

funded from fees collected from members or assessed on regulated entities.

c

CFTC did not have a performance-based pay system prior to October 2006.

d

The business operations of FCA and OFHEO are not financed by taxpayer funds. Their annual 

operating budgets, however, undergo the federal budgetary and appropriations process and are 

constrained by the amount approved by Congress and signed into law by the President.

e

The nonbargaining unit employees are never “covered” by the compensation agreement with the 

union, but rather, the FDIC Board proactively decides annually what performance management and 

performance-based pay standards will apply to this population. During the performance appraisal cycle 

we reviewed, the same system that applied to bargaining unit employees was applied to nonbargaining 

unit employees.
Page 50 GAO-07-678 Financial Regulators

Appendix III

Financial Regulators Have Implemented Key 

Practices in Varying Ways ApendxiI

High-performing organizations have recognized that a critical success 

factor in fostering a results-oriented culture is a performance management 

system that creates a “line of sight” showing how team, unit, and individual 

performance can contribute to overall organizational goals and helping 

employees understand the connection between their daily activities and the 

organization’s success. Effective performance management systems are 

essential for successfully implementing performance-based pay. In the 

letter, we addressed important aspects of how 10 financial regulatory 

agencies have implemented two key practices: (1) linking pay to 

performance and (2) making meaningful distinctions in performance. This 

appendix provides detailed information on the financial regulators’ 

implementation of four additional key practices important for effective 

performance management systems, as well as some additional material 

pertaining to the linking pay to performance practice covered in the letter. 

The four additional practices are:

• Align individual performance expectations with organizational goals.

• Connect performance expectations to crosscutting goals.

• Use competencies to provide a fuller assessment of performance.

• Involve employees and stakeholders to gain ownership of performance 

management systems.

The 10 financial regulatory agencies have implemented these four key 

practices for effective performance management systems in various ways, 

reflecting the unique needs of their organizational cultures and structures. 

Agencies Have Aligned 

Individual Performance 

Expectations with 

Organizational Goals in 

Different Ways

The 10 federal financial regulatory agencies have implemented the practice 

of alignment in a variety of ways. An explicit alignment of daily activities 

with broader results is a key feature of effective performance management 

systems in high-performing organizations. These organizations use their 

performance management systems to improve performance by helping 

individuals see the connection between their daily activities and 

organizational goals and encouraging individuals to focus on their roles and 

responsibilities in helping to achieve these goals. The financial regulators 

reinforced alignment of individual performance expectations to 

organizational goals in policy and guidance documents for their 

performance management systems, used standardized performance 

elements or standards for employees in their performance plans, used 
Appendix III

Financial Regulators Have Implemented Key 

Practices in Varying Ways

Page 51 GAO-07-678 Financial Regulators

customized individual performance expectations that contributed to 

organizational goals in individual performance plans, and included the 

corresponding organizational goals directly on the individual performance 

plan forms.1

Agencies Have Reinforced 

Alignment in Policies and 

Guidance for Performance 

Management Systems

Several of the financial regulatory agencies, including FDIC, OCC, FHFB, 

and OFHEO, have reinforced alignment by including language on linking 

individual performance expectations to organizational goals in policy and 

guidance materials for the performance management systems. The 

following are examples of how selected agencies have reinforced 

alignment through policies and guidance.

• A key objective of FDIC’s performance management program as stated 

in a policy directive is to “establish fair and equitable performance 

expectations and goals for individuals that are tied to accomplishing the 

organization’s mission and objectives.”2

 The directive further states that 

employees at FDIC are assessed against performance criteria, which are 

defined as “the major goals, objectives, and/or primary responsibilities 

of a position which contribute toward accomplishing overall 

organizational goals and objectives” (as found in FDIC’s strategic plan 

and annual performance plan). 

• At OCC, the Policies and Procedures Manual for the performance 

management system states that the system is designed to align 

employee performance expectations with organizational objectives and 

priorities. The manual also explains that the starting point for 

identifying individual performance expectations should be unit 

objectives established at the executive committee, district, field office, 

or division level. 

• The handbook and guide for FHFB’s and OFHEO’s performance 

management systems, respectively, contain several references to 

alignment of individual expectations to organizational goals. 

1

According to OPM, performance elements identify the activities, skills, or responsibilities 

that the employee is expected to achieve during the year and performance standards 

identify how well the employee must meet each performance element to receive a specific 

performance rating. 

2

Federal Deposit Insurance Corporation, Performance Management Program, Directive 

System Circular 2430.1, Mar. 28, 2002.
Appendix III

Financial Regulators Have Implemented Key 

Practices in Varying Ways

Page 52 GAO-07-678 Financial Regulators

Agencies Have Included 

Alignment in Standardized 

Performance Elements for 

Employees 

Several of the financial regulators, including FCA, CFTC, FHFB, OCC and 

OTS, have reinforced alignment by including standardized performance 

elements or performance standards that link performance expectations to 

organizational goals in employees’ performance plans. We have previously 

reported that results-oriented performance agreements can be effective 

mechanisms to define accountability for specific goals and to align daily 

activities with results.3

 Individuals from the agencies with standardized 

performance elements in their individual performance plans are assessed 

against the same set of performance elements and standards at the end of 

the appraisal cycle, as the following examples illustrate. 

• FCA has included a requirement to contribute to the achievement of 

organizational goals in standardized performance elements for all 

employees in their individual performance plans. Specifically, FCA has 

developed a set of standardized performance elements for each of its 

four occupational groups and in some of these elements, requires 

individuals to contribute to achieving organizational goals and 

objectives. For the senior manager’s occupational group, individuals 

have a standardized performance element—“Leadership and Motivation 

Skills”—in their individual performance plans that measures the 

employees’ ability to accomplish the agency’s goals and objectives. For 

the other three occupational groups, individuals have a standardized 

performance element—“Teamwork and Interpersonal Skills”—in their 

individual performance plans that measures the extent to which the 

employee places emphasis on achieving organizational and team goals. 

In this way, all employees at FCA are assessed on the extent to which 

they contribute to organizational objectives through a standardized 

performance element. 

• While not requiring a standardized performance element related to 

alignment in the individual performance plans for all employees, CFTC 

has reinforced alignment through the performance standards used for 

rating all employees at the end of the performance appraisal cycle. 

Specifically, in order for all employees to achieve the highest summary 

performance rating, individuals must “achieve element objectives with 

extensive impact on organizational mission,” which reinforces the line 

of sight between individual performance and organizational results. In 

this way, for all employees at CFTC, the individual’s contributions to 

3

GAO-04-614; GAO, Managing for Results: Emerging Benefits From Selected Agencies’ Use 

of Performance Agreements, GAO-01-115, Washington, D.C.: (Oct. 30, 2000).
Appendix III

Financial Regulators Have Implemented Key 

Practices in Varying Ways

Page 53 GAO-07-678 Financial Regulators

organizational goals affect his or her ability to achieve the highest 

possible performance rating. Alignment is further reinforced for 

managerial employees at CFTC because they are also assessed on the 

standardized performance element of “Effective Leadership,” which 

requires them to, among other things, accomplish the mission and 

organizational goals of the work unit, and communicate organizational 

goals to subordinates. 

• FHFB has reinforced alignment in standardized performance elements 

for several occupational groups. Standardized elements for executives, 

managers/supervisors, staff attorneys, and professional positions 

contain references to aligning with or contributing to organizational 

goals. 

• OCC has applied an alignment focus in a generic performance standard 

for four occupational groups at the agency. Executives, managers, 

commissioned examiners, and specialists are all rated against a 

standardized performance standard that requires them to contribute to 

organizational goals in order to get the highest rating level of 4 for a 

particular performance element. For example, managers have a 

standardized performance element called “leadership skills,” for which 

the highest level performance standard includes language on meeting 

OCC goals and objectives. Commissioned examiners and specialists 

have a standardized performance element in their individual 

performance plans called “organizational skills,” with an accompanying 

performance standard that requires individuals’ work products to be 

closely aligned with OCC’s goals, objectives, and priorities in order to 

receive the highest rating level. 

• OTS has reinforced alignment in a standardized performance element 

for managers and senior managers. Under the “Leadership Skills” 

standardized performance element, managers are assessed on 

accomplishing the agency’s goals and objectives, taking initiative and 

incorporating organizational objectives into the organization, and 

scheduling work assignments. In addition, senior managers have a 

supplemental performance element that holds them responsible for 

supporting the achievement of OTS’s strategic plan. An OTS official 

stated that the agency is considering expanding the requirement for 

alignment as it makes future changes to the performance management 

system.
Appendix III

Financial Regulators Have Implemented Key 

Practices in Varying Ways

Page 54 GAO-07-678 Financial Regulators

Agencies Have Strengthened 

Alignment by Linking 

Customized Individual 

Performance Expectations to 

Organizational Goals

Several financial regulatory agencies, including SEC, OCC, and the Federal 

Reserve Board, have reinforced alignment for some individual employees 

through customized performance expectations specific to individuals that 

link to higher organizational goals. We have reported that high-performing 

organizations use their performance management systems to improve 

performance by helping individuals see the connection between their daily 

activities and organizational goals and encouraging individuals to focus on 

their roles and responsibilities to help achieve these goals. One way to 

encourage this is to align performance expectations of individual 

employees with organizational goals in individual performance plans. We 

reviewed a small, select set of individual performance plans from each 

agency, and identified the following examples of individual performance 

expectations that linked to higher organizational goals. 

• The performance plan for a senior officer at SEC included the 

performance expectation “Plans and Coordinates Inspection Programs 

and Ensures that Internal Management Controls Exist and Operate 

Effectively” that supports SEC’s strategic goal to “Maximize the Use of 

SEC Resources.” 

• In individual performance plans, OCC has used customized performance 

expectations unique to the individual in addition to standardized 

performance elements to appraise employees. Specifically, the 

performance plan for an information technology (IT) specialist included 

a customized expectation to provide timely, professional, and quality IT 

support to promote efficient utilization of OCC resources. This 

expectation supported the annual OCC objective—“OCC reflects an 

efficient and effective organization.” 

• At the Federal Reserve Board, a performance plan for an economist 

contained a performance expectation to produce a weekly monitoring 

report on Japan and cover Japanese banking and financial issues, which 

contributed to one of the Board’s annual performance objectives in the 

area of monetary policy function: “contribute to the development of U.S. 

international policies and procedures, in cooperation with the U.S. 

Department of the Treasury and other agencies.” 

Agencies Have Strengthened 

Alignment by Stating 

Organizational Goals in 

Individual Performance Plans

FHFB and OCC have reinforced the linkage between the individual’s 

performance expectations and organizational goals by including the 

corresponding organizational goals directly on the individual performance 

plan forms. This helps make clear the line of sight between the employee’s 

work and agency goals, as the following examples illustrate. 
Appendix III

Financial Regulators Have Implemented Key 

Practices in Varying Ways

Page 55 GAO-07-678 Financial Regulators

• FHFB has included the agency mission statement and office mission 

statement to which an employee is contributing at the top of the first 

page of the performance plan form. 

• In many of the individual performance plans we examined from OCC, 

the annual OCC objective to which each customized performance 

element contributed was listed on the form, along with performance 

measures. According to an official, while OCC’s performance 

management policy does not specifically require that the higher 

organizational objective to which each customized performance 

element contributes be listed on the employee’s performance evaluation 

form, managers are advised to include the organizational goals and the 

majority of forms do include them. The official stated that it was an 

oversight not to include this requirement in the policy, and they plan to 

revise the performance evaluation form to include space for the 

corresponding organizational objectives. Figure 5 shows an example of 

how a customized performance element on an individual performance 

plan is linked to an agency goal, clarifying the relationship between 

individual and organizational performance.
Appendix III

Financial Regulators Have Implemented Key 

Practices in Varying Ways

Page 56 GAO-07-678 Financial Regulators

Figure 5: Excerpt from an OCC Commissioned Examiner’s Individual Performance Plan

Source: OCC document; GAO annotation.
Appendix III

Financial Regulators Have Implemented Key 

Practices in Varying Ways

Page 57 GAO-07-678 Financial Regulators

Agencies Have Connected 

Performance Expectations 

to Crosscutting Goals in 

Different Ways

The financial regulatory agencies have connected performance 

expectations to crosscutting goals in several ways. As public sector 

organizations shift their focus of accountability from outputs to results, 

they have recognized that the activities needed to achieve those results 

often transcend specific organizational boundaries. We reported that key 

characteristics of high-performing organizations are collaboration, 

interaction, and teamwork across organizational boundaries.4

 Highperforming organizations use their performance management systems to 

strengthen accountability for results, specifically by placing greater 

emphasis on those characteristics fostering the necessary collaboration, 

both within and across organizational boundaries, to achieve results. 

The specific ways in which the financial regulatory agencies have 

connected performance expectations to crosscutting goals vary. In our 

review of a small, select set of performance plans from some of the 

agencies, we identified some examples of customized individual 

performance plans that identified crosscutting goals that would require 

collaboration to achieve, as well as either the internal or external 

organizations with which the individuals would collaborate to achieve 

those goals. All of the agencies recognized the importance of collaboration 

by including performance elements for collaboration or teamwork within 

and across organizational boundaries in individual performance plans for 

at least some employees. Several agencies applied standardized 

performance elements related to teamwork or collaboration to employees. 

Agencies Have Identified 

Crosscutting Goals and 

Organizations for Collaboration 

in Individual Performance Plans 

We found examples of performance plans customized to individuals at 

OCC, FCA, the Federal Reserve Board, and SEC that identified crosscutting 

goals, as well as either the internal or external organizations with which the 

individuals would collaborate to achieve these goals. We have reported that 

more progress is needed to foster the necessary collaboration both within 

and across organizational boundaries to achieve results.5

 One strategy for 

fostering collaboration is identifying in individual performance plans 

specific programmatic crosscutting goals that would require collaboration 

to achieve. Another strategy for fostering collaboration is identifying the 

relevant internal or external organizations with which individuals would 

4

GAO, Human Capital: Managing Human Capital in the 21st Century, GAO/T-GGD-00-77

(Washington, D.C.: Mar. 9, 2000).

5

GAO-04-614.
Appendix III

Financial Regulators Have Implemented Key 

Practices in Varying Ways

Page 58 GAO-07-678 Financial Regulators

collaborate to reinforce a focus across organizational boundaries in 

individuals’ performance plans, as the following examples illustrate. 

• At OCC, an employee had an expectation in his individual performance 

plan to enhance the division’s ability to work cooperatively and 

effectively together with other operational risk divisions, as well as 

enhance coordination with federal and state agencies and outside 

banking groups to promote consistency and to advance OCC 

viewpoints, while contributing to OCC’s objective for U.S. and 

international financial supervisory authorities to cooperate on common 

interests.

• A senior manager at FCA had a customized expectation in his individual 

performance plan to work closely with and coordinate Office of 

Examination initiatives with other offices, notably the Office of General 

Counsel and Office of Public Affairs, to support the FCA Chairman and 

Chief Executive Officer’s three strategic goals, which are (1) improving 

communications and relationships with the Farm Credit System, 

(2) gaining greater efficiency and effectiveness of the agency, and 

(3) promoting the Farm Credit System to become the Premier Financier 

of Agriculture and Rural America. 

• An executive at the Federal Reserve Board had an expectation in his 

individual performance plan to undertake expanded discussions with 

SEC on information-sharing, cooperation, and coordination with the aim 

of strengthening consolidated supervision and achieving consistency in 

the implementation of Basel II.6

• At SEC, a senior officer in the market regulation division had an 

expectation in his individual performance plan to advance market 

regulation objectives through cooperative efforts by coordinating with 

other SEC offices, other U.S. agencies, self-regulatory organizations, 

international regulators, and the securities industry.

6

Basel II is a set of proposed changes to the original set of risk-based capital rules based on 

an internationally adopted framework developed by the Basel Committee. In the United 

States, Basel II rules are intended to apply primarily to the largest and most internationally 

active banking organizations.
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Agencies Have Included 

Performance Elements Related 

to Collaboration or Teamwork in 

Individual Performance Plans 

All of the financial regulators included performance elements related to 

collaboration or teamwork within and across organizational boundaries in 

individual performance plans for at least some of their employees. 

Performance elements related to collaboration or teamwork in individual 

performance plans can help reinforce behaviors and actions that support 

crosscutting goals and provide a consistent message to all employees about 

how they are expected to achieve results. CFTC, FHFB, NCUA, and the 

Federal Reserve Board provide examples of how standardized 

performance elements pertaining to teamwork or collaboration have been 

applied to employees. 

• CFTC has established a standardized performance element for all 

employees that emphasizes collaboration or teamwork, called 

“Professional Behavior,” which requires employees to behave in a 

professional and cooperative manner when interacting with coworkers 

or the public and willingly initiate and respond to collaborative efforts 

with coworkers, among other things.

• At FHFB, all employees have performance elements or standards 

related to collaboration or teamwork in the standardized performance 

plans for their occupational groups. For example, the standardized 

performance plan for executives includes a performance element for 

“teamwork” that requires executives to collaborate effectively with 

associates and promote positive and credible relations with associates, 

among other things. The standardized performance plan for 

administrative positions also includes a “teamwork” performance 

element. For the other three occupational groups, collaboration or 

teamwork is captured in a performance standard. For example, the 

standardized performance plans for professional positions and 

managers/supervisors have a performance element that emphasizes 

collaboration or teamwork, called “Professionalism,” which requires the 

employee to develop and maintain effective working relationships with 

all employees at all levels throughout the agency and external to the 

agency and foster effective internal and external communication, among 

other things. 

• NCUA has performance elements related to collaboration or teamwork 

in the standardized individual performance plans for some occupational 

groups, such as examiners. For example, in the standardized 

performance plan for some examiners, there is a performance element 

for “customer service and teamwork” that requires the individual to 

demonstrate initiative, responsibility, and accountability to both internal 
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and external customers and work in collaboration with coworkers and 

others toward common goals. NCUA officials stated that a 

collaboration/teamwork performance element may not be applicable to 

all positions. They also said that, to the extent that this is an appropriate 

performance element on which an employee should be rated, the agency 

has or will include it in that employee’s performance plan.

• According to Federal Reserve Board officials, the performance plans for 

some occupations at the agency, such as security and administrative 

positions, include teamwork as a standard element. Officials also said 

that customized performance plans for other occupations typically 

include teamwork or collaboration as a competency.

Agencies Have Used 

Competencies in Various 

Ways to Provide a Fuller 

Assessment of Performance

All 10 of the financial regulatory agencies have used competencies, which 

define the skills and supporting behaviors that individuals are expected to 

demonstrate to carry out their work effectively. High-performing 

organizations use competencies to examine individual contributions to 

organizational results. We have reported that core competencies applied 

organizationwide can help reinforce behaviors and actions that support the 

organization’s mission, goals, and values and can provide a consistent 

message about how employees are expected to achieve results.7

 As 

previously discussed, while some of the financial regulatory agencies have 

included customized performance expectations specific to individuals in 

performance plans, we found that all of the agencies have used 

competencies. There are some variations in the ways in which the agencies 

have structured and applied competencies to evaluate employee 

performance. One of these variations concerns whether or not the agency 

has assigned different weights to competencies when determining overall 

summary ratings for individuals. 

Agencies Have Applied 

Competencies Organizationwide

With the exception of the Federal Reserve Board, all of the federal financial 

regulatory agencies have developed sets of core competencies that apply to 

groups of employees, and assess employee performance using those 

competencies as part of the annual performance appraisal process. Using 

competencies can help strengthen the line of sight between individual 

performance and organizational success by reinforcing performance 

7

GAO-04-614.
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expectations that support achievement of the agency’s goals, as the 

following examples illustrate. 

• FCA has a different standardized performance plan for each of four 

occupational groups of employees—senior managers, supervisors, 

examiners/attorneys/analysts/other specialists (non-supervisory), and 

administrative/technicians. Each of the plans includes a standard set of 

competencies, called critical elements, which applies to all employees in 

that group. Specifically, the performance plan for employees in the 

examiners/attorneys/analysts/other specialists group contains the 

following competencies—technical and analytical skills; organizational 

and project management skills; teamwork and interpersonal skills; 

written and oral communication skills; and equal employment 

opportunity (EEO), diversity and other agency initiatives. A few 

sentences are included on the performance plan form to describe what 

each element measures in terms of the employee’s knowledge, skills, 

and behavior, as shown in figure 6.
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Figure 6: Excerpt from an FCA Individual Performance Plan

• For the July 2005 to June 2006 performance appraisal cycle we reviewed 

at CFTC, all employees were assessed on a set of five competencies, 

called critical elements. Managerial employees were also assessed on 

three additional competencies having to do with leadership, developing 

staff, and supporting diversity and EEO programs. 

• FDIC has 27 different performance plans with corresponding sets of 

competencies, called performance criteria, to cover all employees. 

According to agency officials, FDIC has learned from experience that 

having a performance management system that is based on standardized 

Source: GAO analysis of FCA document.

Critical Element (competency)

Occupational Group

Description of 

knowledge/skills/behaviors

covered by critical element
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sets of competencies has allowed employees’ performance to be 

compared more easily to the standards from period to period. In 

addition, FDIC’s system bases merit pay increases for individuals at 

least partly on corporate contributions (defined as contributions to 

corporate, division, or unit-level goals). Officials said that this type of 

system really enhances employee line of sight and has helped employees 

focus on how their contributions align with the achievement of 

organizational goals. In their view, this type of system promotes 

alignment and consistency more effectively than a system of individual 

contracts between supervisors and their employees. 

• NCUA has approximately 240 detailed performance plans that are 

tailored to specific occupations and grade levels of employees and that 

include competencies, which are called elements. All of the employees 

to whom a particular performance plan applies are assessed on the 

same set of elements and performance standards. Elements for some 

employees within the same occupation are universal, but standards can 

differ by grade level. For example, the performance plans for examiners 

in grades 7, 11, and 12 all include basically the same elements, but some 

of the performance standards upon which individuals are to be 

appraised for each element vary by grade level.

• The Federal Reserve Board differs from the other financial regulatory 

agencies in the way it uses competencies. The agency does not have sets 

of core competencies that apply to specified groups of employees 

across the agency. Instead, divisions have latitude to vary the design and 

implementation of the performance plan form and process. According to 

agency officials, divisions select competencies that best suit 

occupational types and the divisions’ goals, because the Board has 

multiple responsibilities dealing with monetary policy and financial 

institution regulation. It is possible for employees in the same 

occupational group, but in different divisions, to be rated against 

different sets of competencies. Agency officials said that they have not 

heard complaints from similar occupational groups that they may be 

assessed against different competencies. Further, all officers, managers, 

and supervisors are rated against the same four management objectives 

of communications, staff development, effective planning and 

administration of financial resources, and equal employment 

opportunity.

Agencies Have Assigned Weights 

to Competencies

A few of the agencies, such as OFHEO, FCA, and NCUA, allow differing 

weights to be assigned to specific competencies when determining overall 
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summary performance ratings for individuals. Using weights enables the 

organization to place more emphasis on selected competencies that are 

deemed to be more important in assessing the overall performance of 

individuals in particular positions. Other agencies, including OCC, OTS, 

FDIC, CFTC, and FHFB, do not assign differing weights to competencies, 

as the following examples illustrate.

• At OFHEO, the rating official for each employee assigns a weight to 

each of the competencies (called performance elements) included in the 

individual’s performance plan, in consultation with the reviewing 

official. Each competency must have a minimum weight of at least 5, 

with the total weight of all the competencies in an individual 

performance plan equaling 100. Any competency with a weight of 20 or 

higher is considered to be critical. Each competency element is 

weighted and scored (see figure 7), and then the weighted ratings for the 

competencies are summed to derive the total summary rating for the 

individual.8

8

According to an agency official, OFHEO’s weighting system is expected to be modified as 

revisions are made to the performance management system.
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Figure 7: Example of OFHEO’s Worksheet for Weighting Performance Elements

• FCA also permits supervisors to assign different weights to 

competencies for individual employees, within the standardized 

performance plans, at the beginning of the appraisal period. No 

competency can be weighted less than 5 percent or more than 40 

percent.

Source: GAO analysis of OFHEO document.

15

8 15 120

The name of the Performance Element being rated. 

Each Performance Element has a weight assigned to it. The 

combined weights of all Performance Elements contained in the 

performance plan must equal 100.

The Element Rating is the element weight assigned to the performance element

multiplied by the performance rating for the element.

If the Element weight is calculated to be over 20, then this is

considered a major evaluation area and the box below is checked.
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• At NCUA, the elements for the various occupations and grade levels 

have different weights assigned to them, depending on the priorities and 

skills pertaining to the positions. The weights are specified on the 

performance plan form for each position.

• Some of the financial regulatory agencies, including OCC, OTS, FDIC, 

CFTC, and FHFB, do not assign different weights to competencies when 

appraising employee performance. Instead, all of the competencies in an 

employee’s performance plan are equally considered during the 

appraisal. For example, at OCC, all of the competencies (which are 

called skill-based performance elements) that are contained in an 

individual’s performance plan are considered to be critical, so they 

receive equal weight when determining the overall summary rating for 

that individual, according to an official. 

Agencies Have Involved 

Employees and 

Stakeholders in Various 

Ways to Gain Ownership of 

Performance Management 

Systems

The financial regulatory agencies have used several strategies to involve 

employees in their systems, including (1) soliciting or considering input 

from employees on developing or refining their performance management 

systems, (2) offering employees opportunities to participate in the 

performance planning and appraisal process, and (3) ensuring that 

employees were adequately trained on the performance management 

system when rolling out the system and when changes were made to the 

system. Overall, the 10 agencies have employed these strategies differently. 

Effective performance management systems depend on individuals’, their 

supervisors’, and management’s common understanding, support, and use 

of these systems to reinforce the connection between performance 

management and organizational results. Employee involvement improves 

the quality of the system by providing a front-line perspective and helping 

to create organizationwide understanding and ownership. 

Agencies Have Considered 

Employee Input for Developing 

or Refining Performance 

Management Systems

All of the financial regulatory agencies, in some way, solicited or 

considered employee input for developing or refining their performance 

management systems by working with unions or employee groups to gather 

employee opinions or conducting employee surveys or focus groups. An 

important step to ensure the success of a new performance management 

system is to consult a wide range of stakeholders and to do so early in the 

process. High-performing organizations have found that actively involving 

employees and stakeholders, such as unions or other employee groups that 

represent employee views, when developing results-oriented performance 

management systems helps to improve employees’ confidence and belief in 

the fairness of the system and increase their understanding and ownership 
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of organizational goals and objectives. Feedback obtained from these 

sources is also important when creating or refining competencies and 

performance standards used in performance plans. However, in order for 

employees to gain ownership of the system, employee input must receive 

adequate acknowledgement and consideration from management. 

Agencies Have Involved Employee Groups in the Performance 

Management System Process

Unions and employee groups had some role in providing comments or 

input into the performance management systems at some of the financial 

regulators. Six of the regulators (CFTC, FDIC, NCUA, OCC, OTS, and SEC) 

had active union chapters, and four agencies (FCA, Federal Reserve Board, 

FHFB, and OFHEO) had employee groups.9

 We have previously reported 

that obtaining union cooperation and support through effective labormanagement relations can help achieve consensus on planned changes to a 

system, avoid misunderstandings, and more expeditiously resolve 

problems that occur.10 The degree to which unions and employee groups 

were involved in providing comments or input into the development or 

implementation of performance management systems varied from agency 

to agency. A few of the agencies with unions have to negotiate over 

compensation. Unions at some agencies were involved in participating in 

negotiations, entering into formal agreements such as contracts and 

memoranda of understanding, and initiating litigation concerning the 

development or implementation of performance management systems. At 

other regulators, employee groups were invited to comment on aspects of 

the performance management system, as the following examples illustrate. 

• OFHEO has used ad hoc employee working groups to study different 

human capital issues and advise management on recommendations for 

changes. Specifically, OFHEO established a working group to look at 

teamwork and communication in the agency and the group 

recommended changes to the individual performance plans relevant to 

teamwork and communications. As a result of the group’s 

recommendation, OFHEO included additional language for the agency’s 

9

Employees at FDIC, NCUA, OCC, and SEC are represented by the National Treasury 

Employees Union. OTS employees in Washington, D.C., and CFTC staff at two offices are 

represented by the American Federation of Government Employees. 

10GAO, Human Capital: Practices that Empowered and Involved Employees, GAO-01-1070

(Washington, D.C.: Sept. 14, 2001).
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performance plans in the performance elements of teamwork and 

communication.

• At FDIC, the union participated with management in formal negotiations 

regarding the establishment of the agency’s performance management 

and pay for performance systems and how the systems would work. 

Both parties are bound by the terms of the formal agreements that 

resulted.

• At NCUA, union representatives together with management issued a 

memorandum of understanding in June 2006 detailing how supervisors 

are supposed to introduce new performance plans for specified 

examiner positions. The agreement set the timing of the introduction of 

new performance standards, required training for rating officials, 

required supervisors to give progress reviews to their employees on 

achievements to date, and required supervisors and employees to 

discuss the new standards.

• SEC will implement a new compensation and benefits system as a result 

of an October 2006 ruling from the Federal Service Impasses Panel 

(Panel).11 The Panel became involved when SEC and union negotiations 

over a compensation and benefits agreement reached an impasse. SEC 

management told us that they have formed a labor-management working 

committee to discuss how to implement the terms of the new 

Compensation and Benefits Agreement as provided for under the Panel 

ruling. 

Agencies Have Directly Engaged Employees in Consultations about 

the Performance Management System

The financial regulatory agencies involved employees in different ways 

when developing their performance management systems. This process 

can involve directly engaging individual employees and collecting opinions 

from all employees through focus groups, surveys, or other forms of 

feedback to develop a successful performance management system. 

Further, soliciting employee input is also important when developing or 

11The Federal Service Impasses Panel is part of the Federal Labor Relations Authority and 

resolves impasses between federal agencies and labor unions representing federal 

employees arising from negotiations over conditions of employment. The Panel may make 

recommendations to the parties on how to overcome the impasse, if bargaining and 

mediation are unsuccessful.
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revising competencies or performance elements and related performance 

standards in a performance management system in order to ensure that the 

competencies and standards reflect skills and behaviors that are relevant to 

employee tasks and responsibilities. While all of the financial regulators 

involved employees to some degree, as the following examples illustrate, 

NCUA did not consistently solicit input on developing or revising the 

competencies and standards.

• In 2003-2004, when the Federal Reserve Board sought to revamp its 

performance management system, the agency hired an outside 

consultant to conduct focus groups with the intent of identifying issues 

raised by employees and making recommendations to address any 

concerns. Some focus group participants said that the agency’s 

recommended rating distribution guidelines might prevent some 

employees from achieving a rating in the highest category. Furthermore, 

some employees were concerned about possible unfairness in ratings 

and wanted to see the distribution of the performance ratings for all 

employees published. As a result of this feedback, management began 

publishing the agency’s ratings distributions, and added information on 

the system’s process to the agency’s internal Web site on the 

performance management system.

• When developing its first performance-based pay system in 2006, CFTC 

solicited employee input through a variety of methods. The agency hired 

a contractor to conduct focus groups and to survey employees about 

transitioning to a performance-based pay system and the administration 

of a performance management system. The contractor also hosted a 

Webinar, a Web-based interactive seminar that allows for the submission 

of anonymous questions and comments, to present the results of the 

employee survey. Additionally, CFTC conducted town hall meetings to 

inform employees about development of the system. As a result of 

employee feedback, management decided to delay the first phase of 

implementation of the system from July 2006 until October 2006 in order 

to allow additional time for employees to learn about the system and 

make the transition. Union representatives at CFTC (Chicago and New 

York) told us that prior to CFTC’s transition to performance-based pay, 

the agency’s management communicated frequently with the union and 

provided appropriate notice prior to implementing changes.

• Through internal surveys, OFHEO received feedback on employee 

concerns regarding opportunities for promotion and the frequency of

progress reviews. According to an agency official, feedback from an 
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employee survey indicated that employees wanted more opportunities 

for promotion than the prior six pay-band system allowed. On the basis 

of this employee feedback, OFHEO made the decision to switch to 18 

pay grades and created career ladders. Further, employees commented 

through the survey that they wanted more feedback on their 

performance during the year. As a result, OFHEO increased the number 

of progress review meetings from two to four per year. An agency 

official stated that the Office of Human Resources Management 

monitors these meetings to ensure that they have been held.

• SEC has analyzed data on SEC responses to OPM’s governmentwide 

Federal Human Capital Survey. According to agency officials, SEC has 

tracked employee responses to questions on, for example, how well the 

agency rewards good performers and deals with poor performers. In 

addition, SEC has created a mailbox for anonymous employee 

comments and constructive criticism on the performance management 

system.

• FCA circulated a draft of its proposed performance management system 

in 2002, and solicited comments from employees. As a result of 

employee comments, FCA revised the descriptions of performance 

elements in the performance plans, changed the weight of an element 

dealing with equal opportunity employment, eliminated one element, 

and provided additional guidance and training. To show how employee 

feedback was addressed, FCA management presented a briefing to 

employees, which listed some of the employee comments about the 

individual performance plans with accompanying responses from 

management.

• According to an NCUA official present at the time when the agency 

originally developed its performance elements and standards, NCUA 

conducted job analysis studies for all positions, which involved 

employees and supervisors in identifying specific duties, skills, and 

competencies needed to accomplish different jobs. In addition to the 

studies, she said that NCUA surveyed employees and conducted an 

assessment to identify any gaps in the performance elements and 

standards. In 2006, when NCUA revised the elements and standards for 

some examiner positions, NCUA used a committee consisting of 

managers, supervisors, and one employee to develop the new elements 

and standards. Union representatives told us they were briefed on the 

final version of the elements and standards, but were not asked for 

input. NCUA is currently revising individual performance plans for other 
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positions and the process does not include provisions for soliciting and 

incorporating employee input. In comments on the draft of this report, 

NCUA officials stated that NCUA sought to solicit input from employees 

for certain positions, but that it was not necessary for positions that are 

common across the government, since NCUA usually adopts the 

competencies established by OPM for those positions.

Some union and employee group representatives we spoke with did not 

think that management gave adequate consideration to employee input. 

For example, the Employees’ Committee at the Federal Reserve Board, 

which provides advice to the Management Division on a variety of issues, 

was asked to provide comments during the latest revision of the 

performance management system. According to committee members, the 

committee submitted a paper containing recommendations in response to 

this management request. The committee, however, did not receive a 

written response from management acknowledging their recommended 

changes. Committee members told us they are now hesitant to submit input 

during the current strategic planning process because they are concerned 

about the usefulness of putting time and energy into developing 

recommendations that may not be considered. According to agency 

officials, the responses from the Employees’ Committee and other 

employee focus groups held on this topic were summarized by the 

consultant hired for the project and the consultant presented the summary 

comments to management through the executive oversight committee. In 

addition, management officials stated that they met with other committee 

members (i.e., the heads of special interest groups) to discuss their input. 

The Federal Reserve Board’s Administrative Governor has also held 

monthly meetings with randomly selected employees as an opportunity for 

employees to voice their concerns about the performance management 

program, among other topics.

Agencies Have Encouraged 

Employee Participation in 

Performance Planning and 

Appraisals

All of the agencies, including FCA and FHFB, required or encouraged 

employee participation in developing individual performance plans or 

writing self assessments, contribution statements, or reports summarizing 

accomplishments at the end of the appraisal cycle. In high-performing 

organizations, employees and supervisors share the responsibility for 

individual performance management and both should be actively involved 

in identifying how individuals can contribute to organizational results and 

be held accountable for their contributions. By actively participating, 

employees are not just recipients of performance expectations and ratings, 

but rather, have their ideas heard and considered in work planning and 

assessment decisions. However, employee representatives from some 
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agencies, such as FDIC, OTS, and OCC, expressed concern that employees 

were not actively involved in the performance planning and appraisal 

processes even when the agency required or encouraged such 

participation.12

• At FCA, employees could participate in performance planning by 

working with their rating officials to identify accomplishments expected 

to be achieved during the appraisal period. In addition to participating in 

an official mid-year performance review, at the end of the appraisal 

cycle, employees and supervisors could meet for a pre-appraisal 

interview to discuss the employees’ accomplishments during the 

previous year. Additionally, employees could submit an optional self 

assessment of their performance. This input was supposed to be 

considered when the supervisor evaluated the employee, according to 

FCA policy.

• Employees at FHFB had several options for participating in developing 

their performance plans—working with the supervisor to develop the 

plan, providing the supervisor with a draft plan, or commenting on a 

plan prepared by the supervisor. 

Although FDIC, OTS, and OCC provided some opportunities for employee 

participation in the planning and appraisal processes, we heard from union 

representatives at these agencies that this participation did not always 

occur, as the following examples illustrate.

• FDIC’s performance management directive requires that the employee 

and the supervisor have a meeting to discuss all performance criteria 

included in the employee’s performance plan and any expectations 

regarding the quality, quantity or timeliness of work assignments. The 

policy also encourages the employee to submit an accomplishment 

report and to submit written comments on his or her supervisor’s draft 

assessment of the employee’s “Total Performance” before it is 

forwarded to higher levels of review within a pay pool. However, union 

representatives told us that expectation-setting meetings have not been 

12We did not assess whether meetings involving employees in performance planning or 

appraisals were conducted in accordance with agency policy or the quality of the 

interactions between supervisors and employees. We relied on representatives from 

employee groups and unions to describe their perceptions of actual employee participation 

in expectation-setting meetings and their perceptions of management’s consideration of 

employee input into appraisals.
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consistently conducted; instead, sometimes employees have simply 

signed a form to acknowledge receipt of their performance plans. 

Additionally, employee comments on the appraisal form have not been 

taken into account by supervisors, according to union representatives. 

FDIC officials stated that the rating official and employee are required 

to meet to discuss expectations at the beginning of the rating period or 

whenever there is a change in performance criteria. Officials also noted 

that the performance management program is a collaborative process 

that relies on communication between a manager and his or her 

employees, and that the employee is supposed to seek clarification on 

performance criteria or expectations from the supervisor if necessary, 

as is explained in the directive.

• An employee union representative at OTS maintained that employees 

have not been very involved in setting their own performance 

expectations; instead, supervisors have informed them about what they 

should do at the beginning of the performance appraisal cycle. The 

representative told us that supervisors may discuss changing 

expectations with employees during the year, but these discussions have 

not always occurred. According to an agency official, OTS has 

encouraged managers to regularly meet with their employees and 

provide a clear picture of what is expected of employees for the year in 

terms of their individual roles and responsibilities for the standardized 

performance expectations and what will be considered in appraising the 

employees’ performance. 

• Although OCC provided opportunities for employee participation in the 

performance planning and appraisal processes, union representatives 

told us that this participation did not always occur. At OCC, employees 

may participate in developing their individual performance plans and 

are supposed to submit accomplishment reports. Further, officials 

explained that many employees at OCC have secondary objectives in 

their performance plans. Because secondary objectives are customized, 

there should be a discussion between the supervisor and the employee. 

According to an official, if an employee has customized secondary 

objectives included in his or her individual performance plan, the 
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employee and supervisor are supposed to have a discussion about it.13

However, representatives from the union at OCC told us that 

performance plans are pretty generic and are distributed to individuals 

based on their grade levels. They said that some employees do not sit 

with their managers to tailor the plans; instead, employees just sign the 

forms to acknowledge receipt of the plans. 

Agencies Have Provided Training 

on Performance Management 

Systems

All of the financial regulatory agencies have conducted some form of 

training or information dissemination on topics related to performance 

management. Asking employees to provide feedback should not be a onetime process, but an ongoing process that occurs through the training of 

employees at all levels of the organization to ensure common 

understanding of the evaluation, implementation, and results of the 

systems. Providing training when changes are made to a performance 

management system can help ensure that employees stay connected to the 

system and reinforce the importance of connecting individual performance 

expectations to organizational goals. At some agencies, such as SEC and 

FHFB, training has been mainly directed at supervisors, while at FDIC 

training has been given to nonmanagers as well. Formal training for 

nonsupervisors at the agencies has typically been directed at new 

employees or has occurred when significant changes were being made to a 

performance management system. Some agencies have distributed 

materials through the agency intranet, memos, emails, or other written 

documents, as the following examples illustrate. 

• SEC has offered several opportunities for supervisors to learn the 

mechanics and skills necessary for administering the performance 

management system. Specifically, new supervisors have received 

general training on supervisory roles and responsibilities, including 

performance management. For supervisors, SEC has offered two levels 

of classes on managing performance and communicating expectations. 

Supervisors have also had the opportunity to receive training on 

13According to OCC officials, generic performance plans are established for examiners 

because they all perform similar functions. The primary objectives in these standardized 

plans are generic. Any additional primary objectives or secondary objectives included in the 

examiner performance plans are tailored to individuals. According to officials, 

commissioned examiners should have at least one secondary objective in their performance 

plans so that they have the potential to receive a level 4 (highest) performance rating. 

Precommissioned examiners, who are focused on completing a rigorous training program, 

are not required to have secondary performance objectives, although they are not 

prohibited from having them.
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managing labor relations, which has included discussions of SEC’s 

agreement with the union, and the performance-based pay and award 

systems. Supervisors could also attend a briefing on performance 

management concepts and processes. In addition to offering supervisor 

training, SEC informs new employees about the performance 

management system during the orientation program. Performance 

management information is also available to employees through the 

agency’s intranet web site. Finally, supervisors are supposed to brief 

new employees on the performance management system at the 

beginning of the rating cycle, during discussions of individual 

performance standards.

• Most employees at FHFB have not received training on performance 

management since the late 1990s, and are expected to learn about the 

system from their supervisors. However, FHFB offered training for 

managers and supervisors in 2004 on the performance management 

system and how to conduct performance appraisals.

• FDIC has conducted several training sessions and disseminated 

information to managers and employees related to its performance 

management and pay for performance programs. This has included inperson training sessions, taped sessions made available for viewing on 

IPTV, and “question and answer” documents and policy directives 

available on the agency intranet. FDIC provided specific training for 

nonsupervisors in 2006 when management and union representatives 

jointly conducted training sessions on the agency’s new compensation 

agreement. Training was intended for non-management employees, 

including bargaining unit and non-bargaining unit employees, and was 

conducted in a variety of formats. Sessions included discussions of 

employees’ roles and responsibilities in the performance management 

and pay for performance systems. 

Agencies Generally Have 

Linked Pay to Performance 

and Built in Safeguards 

As discussed, the 10 financial regulatory agencies linked pay to 

performance and built safeguards into their performance management 

systems but could make improvements to ensure that poor performers do 

not receive pay increases and to improve the communication of 

performance standards and transparency of performance results. This 

section provides more detailed information on the different ways in which 

the agencies translated performance ratings into pay increases and used 

different budgeting strategies for performance-based pay. The section also 

discusses how the agencies awarded pay increases that considered 
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performance but were not dependent on ratings. Finally, information is 

presented on agency implementation of two additional safeguards: higherlevel reviews of performance rating decisions and establishing appeals 

processes for performance rating decisions. 

Agencies Used Differing 

Methods to Translate 

Performance Ratings into Pay 

Increases 

For increases that were linked to performance ratings, the financial 

regulatory agencies used different methods to translate employee 

performance ratings into pay increases. These methods included 

establishing ranges for increases, using formulas, and considering current 

salaries when making decisions on the amounts of performance-based pay 

increases for individuals.

Several agencies established ranges of potential pay increases 

corresponding to the various performance rating levels. These systems 

gave managers the discretion to determine the exact pay increase amounts 

for individuals, within those ranges, as the following examples illustrate. 

• At OTS, employees who received a rating of 5 (on a 5-level scale) 

received between a 5.5 percent and 7.5 percent pay increase, while 

employees who received a rating of 3 received between a 1.5 percent 

and 3.25 percent pay increase during the appraisal cycle we reviewed. 

Employees who received a rating of 1 or 2 did not receive any pay 

increase. OTS gave managers the flexibility to determine the specific 

pay amount each employee would receive within the range of possible 

pay increases corresponding to that performance rating.

• OCC established ranges of potential pay increases that corresponded to 

different performance rating levels and gave managers the flexibility to 

decide on the exact amount of pay increase that each individual would 

receive within the range that corresponded to that employee’s rating 

level. Each year OCC adopts a merit pay matrix that defines a range of 

allowable percentage increases that may be paid for performance rating 

levels 3 and 4 (the two highest rating categories). During the appraisal 

cycle we reviewed, individuals with a level 3 performance rating were 

eligible to receive a merit increase between 2.1 percent and 5.5 percent, 

and individuals with a level 4 rating could receive a merit increase 

between 5 percent and 9 percent. The rating official recommended the 

percentage of merit pay that each employee with a summary rating of 3 

or 4 should receive. Agency officials told us that it can be challenging for 

managers to determine the pay increase amount for each employee 

within those preestablished pay increase ranges. Managers want to 

ensure consistency among employees with similar levels of 
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performance and often consult with other managers or human 

resources staff for advice when making these pay increase decisions. 

Employee representatives expressed some concern about the 

overlapping ranges for pay increases, and a representative said that 

employees are unclear about what performance behaviors are needed to 

achieve merit increases. 

Other agencies used formulas for determining the amounts of pay increases 

linked to performance ratings to be awarded, as the following example 

illustrates. 

• NCUA used a pay matrix tied to employees’ performance rating scores 

(which could range from 0 to 300) to calculate the pay increase 

percentages. All employees in the same pay pool that received the same 

performance rating would receive the same pay increase percentage. 

Specifically, an employee who received a performance rating score of 

234 fell within the “fully successful” performance rating range and 

received a pay increase of 3.066 percent. Another employee who 

received a performance rating score of 235 fell within the “highly 

successful” performance rating range and received a pay increase of 

3.076 percent. Employees who received a performance rating score 

below 165 fell within the “unsatisfactory” or “minimally successful” 

performance rating ranges and did not receive any pay increases. 

Some agencies considered employees’ current salaries when deciding on 

the amounts for pay increases linked to performance ratings, as the 

following example illustrates. 

• At FCA, the percentage pay increase an employee received depended on 

where the employee’s current salary fell within the pay band. FCA used 

a merit matrix to calculate merit pay increases. The matrix considered 

an employee’s existing salary position within the relevant pay band 

(with position defined in terms of one of five possible quintiles), as well 

as the employee’s performance rating, and determined the percentage 

pay increase corresponding to those factors. For example, for the 

performance appraisal cycle we reviewed at FCA, the percentage 

increase in pay that an employee who received a fully successful 

performance rating could receive ranged from 3.5 percent (for an 

individual whose salary was in the bottom quintile of the pay band) to 

2.0 percent (for an individual whose salary was in the top quintile of the 

pay band). For employees with the same performance rating, an 

employee whose salary was considered to be below market rate at the 
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bottom of the pay band would receive a larger percentage pay increase 

than an employee whose salary was considered to be at or above market 

rate. FCA provided pay increases only to employees who performed 

above a minimally successful rating level. 

At many of the agencies, as an employee’s salary approached the top of the 

pay range for a position, increases linked to performance ratings could be 

received as a combination of permanent salary increase and a one-time, 

lump sum cash payment, as the following example illustrates. 

• At FHFB, for an employee in a position with a pay range of $70,000–

$90,000, if the individual’s salary was near the top of the pay range, he or 

she would receive a performance-based merit increase to take his or her 

salary to the top of the salary range and then receive a lump sum 

payment. 

Across the various methods used to translate performance ratings into pay 

increases, the expectation would be that larger pay increases are 

associated with higher performance ratings. As a means of providing a 

quantified descriptor of how strongly increases in ratings were associated 

with increases in pay linked to those ratings at each of the agencies, we 

computed a Spearman rank correlation coefficient between employees’ 

performance ratings and the percentage increases in pay that were linked 

to performance ratings.14 Although the correlation coefficients for the eight 

agencies varied from +0.63 and +0.94, they all demonstrated a strong

14A correlation coefficient is a measure of association (strength) of the relationship between 

two variables; in this case, ratings and percentage increases in pay. A positive correlation 

coefficient would mean that the two variables tend to increase (or decrease) together. A 

positive coefficient would indicate that as the rating goes up, so does the percentage 

increase in pay. A negative coefficient would mean that the two factors have an inverse 

relationship—as one variable increases, the other decreases. Values of the coefficient may 

range from -1.0 to +1.0. The percentage increase in ratings-linked pay was based on the 

combined value of both increases in base pay and lump sum (one time) payments, relative 

to prior annual salary. The performance appraisal and performance-based pay systems at 

FDIC and SEC were sufficiently different from the other eight agencies that we do not 

include correlation coefficients for these two agencies. See appendix I, Objectives, Scope, 

and Methodology, for additional information concerning the exclusion of FDIC and SEC 

from this analysis.
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positive association between higher performance ratings and higher 

ratings-linked pay increases (expressed as a percentage increase in 

salary).15

While the correlation coefficients provide some additional perspective on 

the linkage between performance ratings and pay increases at the financial 

regulatory agencies, they should be viewed as a rough gauge of the overall 

strength of the relationship across the agencies and are not sufficient for 

ranking or making other comparisons between agencies.16 In reviewing the 

coefficients, we noted that agencies with some of the lowest correlations 

were using a four-level rating system that produced rather constrained 

ratings distributions. In one instance, for example, employees rated at the 

two lowest performance levels (called levels 1 and 2) were not eligible for 

pay increases, and over two-thirds of all employees received a level 3 

rating. Both the base pay increases and bonus amounts that could be 

awarded for level 3 performance overlapped with those for level 4 (the 

highest level), such that some employees rated at level 3 realized a 

percentage increase in pay that was twice the amount obtained by other 

level-3-rated employees, as well as even some level-4-rated employees.

Agencies Used Different 

Budgeting Strategies for 

Performance-Based Pay

The federal financial agencies also varied in their strategies to budget for 

pay increases directly linked to performance ratings. Many of the agencies 

set aside funds each year for performance-based pay increases. At some 

agencies, these funds were treated as an agencywide funding pool or pools 

for performance-based pay increases, as the following examples illustrate.

• According to agency officials, NCUA established two agencywide merit 

funding pools for different employee grade-level groups because higher 

graded employees usually received higher ratings and consequently, 

higher merit pay increases. Officials stated that the establishment of two 

merit funding pools was more advantageous to lower graded employees 

and increased the amount of funds available for their merit pay.

15In those instances where agency rating scales used lower numeric values to indicate higher 

performance levels, the values were reversed so that all coefficients would reflect the 

relationship of an increase in ratings with an increase in pay as a positive coefficient. 

16See appendix I for additional information on the limitations of the correlation coefficient.
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• SEC established one pool of funds for performance bonuses and quality 

step increases available for senior officers, and another pool for all 

other employees. 

At some agencies the performance-based pay increases budget was divided 

into separate pay pools by suborganizational unit, and the responsibility for 

distributing merit pay increases was delegated to management at the 

subunit level, as the following examples illustrate.17

• For the “Pay for Performance” program at FDIC that covers bargaining 

unit and nonbargaining unit employees, the agency established pay 

pools at the division level (and at the regional level for the large Division 

of Supervision and Consumer Protection), and allocated funds for 

performance-based pay increases to the pools. Funds were allocated 

through pay pools to each division and office, with subsequent 

separations of each division or office into separate populations for 

bargaining unit and nonbargaining unit employees. (Corporate 

managers and executives at FDIC are covered by a separate pay-at-risk 

compensation system.) 

• FHFB provided each office with a pay pool for performance-based 

annual pay increases. The merit increase pool amounts were determined 

based on the approved governmentwide general increase plus 2.5 

percent of the total base salaries for all employees in the office. An 

FHFB official stated that the reason each office was provided with a 

pool of funds was to avoid comparing individuals with different 

functions and responsibilities to each other, and this official believed 

that FHFB had greater control when pay decisions were made at the 

office level. For example, an office director could decide to assess all his 

staff at the outstanding level, but less performance-based pay would be 

available for each office employee. Office directors were responsible for 

determining the sum of all merit increases and lump sum payments for 

their offices, while not exceeding their offices’ merit increase pool 

allocations.

17Officials at one agency told us that setting separate budget amounts for merit pay 

increases for each unit helped to ensure that merit pay resources were more fairly 

distributed across the units. 
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Agencies Provided Other 

Increases That Considered 

Performance 

In addition to providing ratings-based pay increases, the financial 

regulatory agencies awarded pay increases that considered individual 

performance in some way without being directly linked to employees’ 

performance ratings. The following are additional examples of these types 

of pay increases at the agencies to supplement the material presented in 

the body of the report. 

• The Federal Reserve Board offered a cash awards program, which 

accounted for about 2.5 percent of the total agency salary budget, to 

reward employees who sustained exceptional performance or made 

significant contributions to successful projects, according to officials. 

According to the Federal Reserve Board’s criteria for this awards 

program, cash awards could be given to employees who initiated, 

recommended, or accomplished actions that achieved important 

Federal Reserve Board goals, realized significant cost reductions, or 

improved the productivity or quality of Board services. These awards 

could be made in any amount up to a maximum of 10 percent of an 

employee’s base pay within the same performance cycle. The 10 percent 

maximum did not apply to variable pay awards, which are given instead 

of cash awards to economists, attorneys, or Federal Reserve Board 

officers.

• For some regulators, these types of pay increases were sizeable. For 

example, at OCC, approximately 10 percent of employees were awarded 

a special increase during the completed appraisal cycle we reviewed. 

The awards represented a 5 percent raise for those individuals. 

According to OCC policy, special increases are to be awarded to 

recognize increased value an employee contributes to his or her job by 

applying desirable skills over a significant period of time or by assuming 

higher-level responsibilities within his or her pay band. OCC also 

provided some pay increases for competitive and noncompetitive 

promotions during the appraisal cycle we reviewed. Interestingly, of the 

eight financial regulators that participated in OPM’s 2006 Federal 

Human Capital Survey, OCC had the largest percentage of employees 

agreeing with the view that awards in their work units depended on how 

well employees performed their jobs. At OCC, 55.7 percent of employees 

agreed with this view. Governmentwide the corresponding figure was 

39.8 percent of employees. Two other agencies, FCA and NCUA, also 

had slightly over 50 percent of their employees agreeing with this 

statement.
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Results from the 2006 OPM Federal Human Capital Survey suggest that the 

financial regulatory agencies have done relatively better than many 

agencies governmentwide in linking pay to performance. All eight of the 

financial regulators that participated in the 2006 survey had percentages of 

positive responses from their employees that were about the same as or 

better than the governmentwide percentage of 21.7 positive responses to 

an item asking employees whether they agreed or disagreed with the 

statement that pay raises depended on how well employees performed 

their jobs at their agencies. The percentage of employees giving a positive 

response to this item was at least twice as high as the governmentwide 

value for a majority of the eight agencies participating in the survey.

Agencies Built in Safeguards While the financial regulatory agencies built safeguards into their 

performance management systems, the agencies established and 

communicated standards for differentiating among performance rating 

categories and criteria for performance-based pay decisions to varying 

degrees. The agencies also built in additional safeguards of establishing 

higher-level reviews of performance rating decisions by either higher-level 

officials or oversight groups, and all have established appeals processes for 

employees to request reconsiderations of performance rating decisions. It 

is important for agencies to have modern, effective, credible, and, as 

appropriate, validated performance management systems in place with 

adequate safeguards to ensure fairness and prevent politicization and 

abuse. We have reported that a common concern that employees express 

about any performance-based pay system is whether supervisors have the 

ability and willingness to assess employees’ performance fairly.18 Using 

safeguards can help to allay these concerns and build a fair and credible 

system. 

Agencies Implemented Higher-Level Reviews of Performance Rating 

Decisions

Although they have used different approaches, all of the federal financial 

regulatory agencies have provided higher-level reviews of individual 

performance rating decisions to help ensure that performance standards 

were consistently and equitably applied across the agency. All of the 

agencies have established at least one level of review of employees’ 

performance ratings to help ensure that performance standards were 

applied appropriately. At some agencies, this oversight process has 

18GAO-06-142T.
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involved a second-line supervisor or higher-level official reviewing the 

employee’s performance rating to ensure that the rating was appropriate 

and consistent with any narrative describing the employee’s performance. 

Some agencies also have offices outside of the employee’s team/office, 

such as the Human Capital Office, review employee performance ratings to 

ensure that rating decisions for groups of employees (agencywide, or by 

division or region) were fair and equitable, as the following examples 

illustrate. 

• OCC officials indicated that at the end of every appraisal cycle, they 

have evaluated the results of the performance management and pay 

system by looking, for example, at the differentiation in ratings and pay 

decisions and how the pay ranges were used. The human resources 

officials have discussed these results with managers to show them how 

their employees’ performance ratings and pay decisions influenced 

OCC’s overall results. For example, OCC introduced merit bonuses for 

the first time in the 2005 performance appraisal cycle. Upon reviewing 

the results of the merit bonus decisions, OCC officials found that the 

percentage of employees in each organizational unit that received a 

merit bonus varied widely among the units—ranging from a high of over 

80 percent of employees receiving a bonus in one unit to 30 percent in 

another unit. As a result, according to agency officials, OCC decided to 

recommend a minimum amount for bonuses and restrict the percentage 

of staff who can receive a bonus to 50 percent within each 

organizational unit. Agency officials also indicated that they have 

identified areas of future training on the system based on the results of 

reviews and subsequent discussions with managers, in order to improve 

implementation of the system. 

• At NCUA, an employee’s performance rating was completed and signed 

by the rating official, and then a reviewing official (an office or regional 

director) reviewed the employee’s performance rating to ensure that the 

rating was supported. Reviewers also look for consistency throughout 

the rating process. For example, an Associate Regional Director will 

look across all examiners’ ratings in the region for consistency. 

• FHFB provided a supervisory review of performance ratings to help 

ensure that an employee’s recommended rating was justified as well as 

consistent with other ratings in the employee’s work group. Once the 

rating official (usually a first-line supervisor) recommended an initial 

summary rating, the rating official would forward the rating to a secondline supervisory reviewer (usually the division director or deputy 
Appendix III

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director), called a reviewing official. According to FHFB officials, the 

reviewing official was usually knowledgeable about the employee’s 

performance and could discuss the rating narrative and final rating 

decision with the rating official before the rating was shared with the 

employee. In addition, the reviewing official checked whether 

performance rating narratives supported individual performance 

elements, summary ratings were properly calculated and appropriately 

signed, and there was consistency of ratings across the work group. 

FHFB employee representatives with whom we spoke stated a belief 

that the rating review process was effective and that supervisors did not 

give ratings unless they first reviewed their decisions with management. 

Employee representatives noted that there is a commitment in the 

agency to be fair and equitable in assigning ratings. 

• FCA provided multiple levels of reviews of ratings to ensure the 

appropriateness of rating scores and consistency in applying 

performance standards across FCA offices. After the rating official 

completed an initial rating, a second-line reviewer was assigned to 

review each employee’s rating against the standards. Before final ratings 

were issued, FCA’s Office of Management Services provided a check to 

ensure that offices were appropriately and consistently applying 

performance standards and to look for any significant outliers. 

Employee performance assessments rated as outstanding and as less 

than fully successful would be reviewed to determine whether rating 

scores matched the narrative discussions. Any potential issues 

identified would be brought to the attention of the rating official for 

discussion and resolution. Management officials told us that the Chief 

Human Capital Officer would meet with division management to discuss 

whether the rating criteria were appropriately applied and then division 

managers would determine whether to change any performance ratings. 

In addition, the Office of Management Services performed a post-rating 

distribution audit to review final rating distributions to help inform 

future rating practices. 

Establish Appeals Processes for Performance Rating Decisions

As mentioned previously, all of the federal financial regulatory agencies 

have established appeals processes for employees to request 

reconsiderations of performance rating decisions to help ensure accuracy 

and fairness in the process. Providing mechanisms for employees to 

dispute rating decisions when they believe decisions are unfair can help 
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Page 85 GAO-07-678 Financial Regulators

employees gain more trust in the system, as the following examples 

illustrate.

• Employees at CFTC could ask for an appeal of their overall rating 

through the agency’s reconsideration process. An employee could first 

appeal his or her rating to the manager who reviewed the rating (called 

the reviewing official) by defending his or her position orally or in 

writing. This Reviewing Official then considered the employee’s 

justification as well as the original rater’s opinion and provided a final 

decision on the matter. According to CFTC officials, employees 

sometimes wanted to change the wording in their performance 

evaluations.

• OTS has defined a grievance policy for employees who are dissatisfied 

with their performance ratings. Employees covered by the bargaining 

unit agreement may file a grievance under the negotiated agreement 

while employees not covered by the agreement may request a grievance 

(within 10 days of receiving their ratings) under the agency’s 

administrative grievance procedures. OTS’ union representative 

reported that in the past, management and union representatives had 

resolved many cases of rating disputes prior to employees filing formal 

grievances.

• The Federal Reserve Board has established an appeals process so that 

an employee can appeal the fairness of an overall rating decision, the 

rating on an individual element, or any adverse comments appearing on 

the performance assessment form. Employee representatives we spoke 

with said that they believe that employees understand the appeals 

process, but thought that more employees could take advantage of this 

opportunity. An employee may first appeal his or her performance rating 

to a division director, who in turn will notify the appropriate supervisor 

who submitted the rating. Then, the division director will determine 

whether the rating is appropriate based upon a review of documentation 

provided by both the employee and supervisor. If the employee is not 

satisfied with the first-level appeal decision, the employee may make a 

second-level appeal to the Associate Director of Human Resources and 

specify areas of disagreement with the performance assessment. The 

Associate Director for the second-level appeal will then determine 

whether the division has reasonably followed procedures and whether 

performance assessment guidelines were applied consistently to other 

employees reporting to the same supervisor. This supporting 

documentation submitted by the division will be shared with the 
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employee, except in cases where doing so infringes on the 

confidentiality of other employees. As a result, first- or second- level 

appeal decisions may result in changes to an overall rating, changes to 

the rating of an individual element, or changes in the language in the 

employee’s performance assessment. 

• OFHEO has established a three-level appeals process to ensure that 

employees can dispute rating decisions when they disagree with rating 

decisions. Employees can appeal the overall performance rating or 

individual performance elements within the rating. For the first-level 

appeal, the employee can submit a request with supporting 

documentation to the performance rating official for reconsideration. If 

an appeal is not resolved at the first level, the employee can request that 

the second-level supervisor review the performance rating and 

supporting documentation. Finally, the employee can request a thirdlevel appeal by the third-level supervisor, if necessary. 
Page 87 GAO-07-678 Financial Regulators

Appendix IV

Actions Taken by Financial Regulators to Seek 

to Maintain Pay and Benefits Comparability 

and Pay and Benefits Data ApendxiIV

The federal financial regulatory agencies have made an effort to meet the 

comparability requirements as required by the Financial Institutions 

Reform, Recovery, and Enforcement Act of 1989 (FIRREA) and subsequent 

legislation.1

 However, we found that factors such as funding constraints, 

when the agency was granted flexibility under Title V of the U.S. Code, the 

needs or preferences of their respective workforces, and each agency’s pay 

and benefits policies can result in some variation in their pay and benefits.2

They have also taken steps to explore a common survey that would enable 

them to more efficiently collect information for pay and benefit 

comparability purposes.

Financial Regulators Have 

Conducted Individual Pay 

and Benefits Comparability 

Surveys and Regularly 

Consult with Each Other, 

but Noted Some 

Inefficiencies in the Process 

To seek to maintain pay and benefits comparability, the majority of the 10 

federal financial regulators have hired external compensation consultants 

to conduct individual formal pay and benefits comparability surveys that 

have included the other financial regulators. As shown in table 5, 7 of the 10 

financial regulators conducted pay and benefits comparability surveys. Of 

the 7, 5 agencies also have included benefits in their formal surveys. 

According to agency officials, because some of the 10 agencies perceive the 

private sector as their main competitor for skilled employees, they have 

included private-sector entities in their pay and benefits surveys or have 

obtained additional private-sector data through the Bureau of Labor 

Statistics and private vendors to complement their pay and benefits 

surveys. 

1

For the six FIRREA financial regulatory agencies (FCA, FDIC, FHFB, NCUA, OCC, and 

OTS), see sections 301, 702, 120-3, 1206, and 1210 of the Financial Institutions Reform, 

Recovery, and Enforcement Act of 1989, Pub. L. No. 101-73 (1989); for OFHEO, section 1315 

of Pub. L. No. 102-550 (1992); for SEC, section 8(a) of Pub. L. No. 107-123 (2002), and for 

CFTC, section 10702 (a) of Pub. L. No. 107-171 (2002). 

2

While many of the financial regulatory agencies received increased flexibility under 

FIRREA in 1989, such flexibility was afforded to OFHEO in 1992 and to CFTC and SEC in 

2002. 
Appendix IV

Actions Taken by Financial Regulators to 

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Comparability and Pay and Benefits Data

Page 88 GAO-07-678 Financial Regulators

Table 5: Pay and Benefits Surveys That Federal Financial Regulators Conducted through External Compensation Consultants, 

1991-2006

Source: GAO summary of agency data.

Agencies

Hired external compensation 

consultants to conduct pay 

comparability surveys

Included 

benefits in 

comparability 

surveys

Years in which 

agencies have 

conducted 

surveys through 

external 

compensation 

consultants Agencies participating in surveys

CFTC No. In 2003 and 2005, used 

consultant to review existing surveys.

N/A N/A Used FDIC and OCC 2002 survey results in 

2003; used interagency group data in 2005.

FCA Conducts a pay survey once every 

2–3 years. 

No 1991, 1993, 1996, 

1999, 2002

The 2002 survey included FDIC, FHFB, the 

Federal Reserve Board, NCUA, OCC, 

OFHEO, and OTS.

FDIC Conducts pay and benefits survey 

about once every 3 years. 

Yes 1996, 1999, 2002, 

2005

The 2005 pay survey included all FIRREA 

agencies as well as the Federal Reserve 

Board, CFTC, OFHEO, SEC, and several 

Federal Reserve Banks. 

The 2005 benefits survey included all 

FIRREA agencies and the Federal Reserve 

Board. 

FHFB Conducted a pay and benefits survey 

once. Also uses FDIC’s pay and 

benefits surveys as a guide. 

Yes 2002 The 2003 survey compared pay and benefits 

with FCA, FDIC, OCC, NCUA, OTS, and the 

Federal Reserve Board.

Federal 

Reserve 

Board

Conducts pay and benefits survey 

every 1–2 years. 

Yes Annual surveys 

conducted 

between 1994 

and 2005, 

excluding 2003. 

The 2005 survey included OCC, FDIC, 

NCUA, OFHEO, OTS, SEC, as well as the 

private-sector entities and academia. 

NCUA Conducted pay and benefits surveys 

twice. 

Yes 2000, 2004 The 2004 pay and benefits survey included 

FDIC, OCC, OTS, FHFB, FCA, SEC, 

OFHEO, and the private sector. 

OCC Conducted a pay survey every year, 

alternating between a full survey that 

covered many benchmarked jobs 

and a simplified survey that covered 

a few of the benchmarked jobs. 

No 1999, 2001, 2002, 

2003, 2006

The 2006 pay survey included FCA, FDIC, 

FHFB, NCUA, OTS, OFHEO, SEC, and the 

Federal Reserve Board.

OFHEO Conducted pay and benefits surveys 

every 3 to 5 years. 

Yes 2000, 2005 The 2005 pay and benefits survey included 

OCC, the Federal Reserve Board, FDIC, 

OTS, FHFB, and FCA. 

OTS No. Conducts informal benchmark 

surveys as needed. 

N/A N/A N/A

SEC No N/A N/A N/A
Appendix IV

Actions Taken by Financial Regulators to 

Seek to Maintain Pay and Benefits 

Comparability and Pay and Benefits Data

Page 89 GAO-07-678 Financial Regulators

The remaining three regulators (CFTC, OTS, and SEC) have participated in 

the pay and benefits surveys of other agencies, and officials from these 

agencies said that they have used the results of these surveys, but have not 

conducted their own. For example, an SEC official told us that his agency 

often uses FDIC’s data because, like SEC, FDIC has a large number of 

compliance examiners and must negotiate pay and benefits with the same 

union as SEC. In 2002 and 2003, CFTC has also hired consultants to review 

existing surveys from FDIC and OCC as well as from information gathered 

from other regulators. 

The agencies hired external compensation consultants to conduct the 

surveys because, according to officials from FCA and FDIC, these 

consultants provide an objective view of their agencies’ pay and benefits. 

And, because they have often worked with other FIRREA agencies, the 

consultants can provide insights and perspectives based on information 

from other agencies. For pay comparability surveys, external 

compensation consultants compare base pay ranges for a given 

occupation, locality pay percentages and, to a lesser extent, annual bonus 

and other cash award policies. To compare pay across agencies, 

consultants send questionnaires on behalf of the sponsoring agency and 

ask participating agencies to match the jobs based on the job descriptions 

provided. The job descriptions usually contain information on duties, scope 

of responsibilities, and educational requirements. External compensation 

consultants also have used various methods to assess the comparability of 

benefits. For example, the consultant for FDIC did a side-by-side 

comparison of benefits offered at other agencies, and also calculated the 

total cost of benefits per employee. 

In addition to conducting comparability surveys, agency officials told us 

that human capital officials at the 10 regulators have formed an interagency 

Financial Regulatory Agency Group. The members regularly consult with 

each other on pay and benefits issues, and as they prepare their budgets for 

the coming year, they meet to exchange information on potential and actual 

changes to pay and benefits. For example, the group has exchanged 

information on updates in merit pay ranges, bonuses, salary pay caps, and 

benefits such as flexible work schedules. Agency officials also have taken 

turns to update a spreadsheet that lists the pay ranges and benefits for all 

10 financial regulators, a key document the agencies use to compare pay 

and especially benefits informally across agencies. 
Appendix IV

Actions Taken by Financial Regulators to 

Seek to Maintain Pay and Benefits 

Comparability and Pay and Benefits Data

Page 90 GAO-07-678 Financial Regulators

However, in consulting with each other to meet comparability 

requirements, agency officials told us that because many of the financial 

regulators conduct comparability surveys, their staffs have had to respond 

to numerous and often overlapping inquiries, which can be burdensome 

and inefficient. This is especially the case for smaller agencies, such as FCA 

and FHFB, which tend to have smaller human capital (personnel) 

departments than larger agencies that may have pay and benefits 

specialists who can handle comparability issues full time, including filling 

out and processing various comparability surveys. According to officials 

from a few regulators, partly as a result of the substantial investment of 

time and resources, some agencies have not been timely or forthcoming in 

sharing their pay and benefits information. 

Regulators Are Exploring 

the Feasibility of a Common 

Survey 

According to several agency officials, in response to renewed interest of 

upper management from several agencies in consolidating pay and benefits 

surveys, the regulators are studying the feasibility of such a method. In 

December 2006, the regulators formed a subcommittee within the Financial 

Regulatory Agency Group to study the feasibility of a common survey. 

Agency officials are exploring whether consolidating the various 

comparability surveys into a common survey will improve the process for 

job matching and result in more efficient use of resources. They also told 

us that the subcommittee also has discussed the feasibility of establishing a 

Web-based data system to make the most current pay and benefits 

information available to participating agencies. The subcommittee is 

working on the details of allocating costs of a common survey among the 

agencies, but has suggested that costs might be prorated based on the size 

of each regulatory agency. As of March 2007, agency officials had not yet 

received cost figures from potential consultants. 

Agency officials who attended the first subcommittee meeting told us that 

implementation of a common survey would require collaboration and 

agreement on a number of matters, such as 

• choice of external compensation consultant to conduct the common 

survey, since different consultants have different approaches to carry 

out the common survey;

• group of jobs to be benchmarked for the common survey and best 

approach for job matching, as some jobs are unique to certain agencies;
Appendix IV

Actions Taken by Financial Regulators to 

Seek to Maintain Pay and Benefits 

Comparability and Pay and Benefits Data

Page 91 GAO-07-678 Financial Regulators

• timing and frequency of the common survey to meet everyone’s needs 

since agencies determine pay and benefits at different times of the year 

and would need the updated information when the need arises; 

• number and types of organizations to include in the common survey 

because while all agencies would want to include the financial 

regulators, some may need information from certain private-sector 

entities; and, 

• cost of the common survey may be substantial, which according to some 

agencies, is a potential concern. 

By forming the subcommittee to explore issues associated with developing 

a common survey, agency officials have adopted some of the practices that 

we identified that would enhance and sustain collaborative efforts. These 

practices include defining and articulating a common outcome, 

establishing means to operate across agency boundaries, and leveraging 

resources.3

Agency officials who are members of the subcommittee told us that the 

officials have sent a formal request for information to several consultant 

candidates. The request inquired about the consultants’ ability to plan and 

execute a common survey that will provide customizable reports for each 

agency and also create a secure, centralized data source on pay and 

benefits. In addition, agency officials asked how the consultants would 

approach job matching, a complicated task. For example, officials from 

FDIC, OFHEO, and SEC told us that the use of different pay plans and 

grades among agencies and the location of field offices in cities with 

different employment market conditions contributed to the difficulty in 

matching jobs across regulators. In addition, some agency officials said 

that it is difficult to match jobs because agencies have different job 

requirements that may differ even when a job title is the same. The 

subcommittee received responses from various consultants and as of 

March 2007 was in the process of contacting the consultants to gather more 

details and to discuss the options available to them. 

3

GAO, Results-Oriented Government: Practices That Can Help Enhance and Sustain 

Collaboration among Federal Agencies, GAO-06-15 (Washington, D.C.: Oct. 21, 2005).
Appendix IV

Actions Taken by Financial Regulators to 

Seek to Maintain Pay and Benefits 

Comparability and Pay and Benefits Data

Page 92 GAO-07-678 Financial Regulators

Most Regulators Used 

Benchmarks Developed 

from Surveys and Other 

Data to Assess 

Comparability and Make 

Adjustments to Pay and 

Benefits

In the absence of a legislative definition, agency officials told us that 

agencies have used various benchmarks, as shown in table 6, to assess pay 

and benefits comparability. For example, FDIC has sought to set its total 

pay ranges (base pay plus locality pay) for specific occupations and grade 

levels within 10 percent of the average of FIRREA agencies, a benchmark 

that pay and benefits consultants have used in their comparability surveys. 

FCA uses benchmarks, including average market rate paid by other 

financial regulators. CFTC uses average payroll and salary structure 

relative to other regulators. FHFB, NCUA, OTS, and SEC told us that they 

have not used specific benchmarks, and OTS uses informal benchmarks as 

needed. 

Table 6: Selected Examples of Benchmarks Agencies Have Used to Assess Pay and Benefits Comparability 

Source: GAO summary of agency information. 

Agency officials told us that all agencies, including the three agencies that 

have not conducted formal benefits surveys, have assessed their benefits 

comparability by comparing individual benefit items as well as agency 

Agencies

Benchmark examples used to assess pay 

comparability

Benchmark examples used to assess 

benefits

CFTC Average payroll, salary structure, etc., relative to other 

regulators.

Benefits being of similar types, and relative 

benefits costs as percentage of payroll.

FCA Pay at average market rate paid by other financial 

regulators. The goal is to be in the middle range of the 

financial regulators. 

No specific benchmarks.

FDIC Since 1999, total pay (base pay plus locality pay) 

within 10 percent of the average of FIRREA agencies. 

Prior to 1999, no specific benchmarks were used. 

Benefits being of similar types and having 

equivalent or similar overall value, without 

necessarily being identical.

FHFB No specific benchmarks. No specific benchmarks.

Federal Reserve Board Pay at the average of the market, including regulators 

and other appropriate competitors. 

Benefits being similar types. 

NCUA No specific benchmarks. No specific benchmarks.

OCC Pay within 10 percent of the other agencies’ (or the 

market’s) median base pay plus locality pay for each 

occupation and grade. 

Benefits being similar types. OCC does not 

consider the cost of benefits. 

OFHEO Pay within 10 percent of average salary of other 

agencies or market average for each occupation and 

grade. 

Benefits being of similar types and having 

equivalent or similar overall value, without 

necessarily being identical.

OTS No specific benchmarks. Informal benchmarks as 

needed.

No specific benchmarks. Informal benchmarks 

as needed.

SEC No specific benchmarks. No specific benchmarks.
Appendix IV

Actions Taken by Financial Regulators to 

Seek to Maintain Pay and Benefits 

Comparability and Pay and Benefits Data

Page 93 GAO-07-678 Financial Regulators

contributions to specific benefits. They added that most agencies have 

used the interagency group spreadsheet that lists all the benefits and 

agency contributions offered. 

According to agency officials, the financial regulators have used 

information from the pay and benefits comparability surveys and 

discussions among the agencies in their efforts to seek to maintain 

comparability. Table 7 provides some recent examples of these efforts.

Table 7: Selected Examples of Recent Pay and Benefits Adjustments Resulting from Agencies’ Comparability Assessments

Source: GAO analysis of agency information.

Agency Pay and Benefits 

Policies and Several Other 

Factors Contribute to 

Variations in Pay and 

Benefits 

Although the financial regulators have adjusted their pay and benefits to 

seek to maintain comparability, several factors influence compensation 

decisions that lead to some variations in pay ranges and benefit packages. 

As shown in figure 3 in the report, with the exception of the Federal 

Reserve Board and OFHEO, the financial regulators’ total pay ranges 

consist of base pay and locality pay percentages that are calculated based 

on the employees’ duty station. The Federal Reserve Board and OFHEO do 

not have separate locality pay percentages because Washington, D.C., is 

their only duty station. Figure 3 also shows that, for examiners, FDIC and 

NCUA pay ranges generally have lower minimum base pay than other 

agencies, and FDIC and OCC have higher maximum base pay for 

examiners. In addition, for economists, CFTC and FDIC pay ranges have

Year Action taken to adjust pay and benefits

2002 FCA adjusted its pay ranges based on its comparability survey, which stated that FCA’s pay was lower than 

other FIRREA agencies.

2002 In response to recently enacted comparability requirements, SEC substantially increased its pay ranges to be 

comparable to those offered at other FIRREA agencies.

2003 As a result of gaining pay flexibilities, CFTC implemented new pay ranges for its 2003 pay schedule; CFTC 

increased base pay by 20 percent for all eligible employees to partially close the 25 percent gap between CFTC 

and FIRREA agencies. 

2006 OFHEO increased its pay ranges across the board based on the findings from its 2005 pay and benefits survey.

2006 The FDIC increased its pay scale minimums by 1.5 percent and pay scale maximums by 6 percent, effective 

February 18, 2006, based on FDIC’s consultant’s analysis of its pay and benefits survey. 
Appendix IV

Actions Taken by Financial Regulators to 

Seek to Maintain Pay and Benefits 

Comparability and Pay and Benefits Data

Page 94 GAO-07-678 Financial Regulators

lower minimum base pay than other agencies, and the CFTC and OCC pay 

ranges have higher maximum base pay.4

Actual average base pay figures that we obtained from the Central 

Personnel Data File and from the Federal Reserve Board also vary among 

the 10 agencies in relation to the agencies’ respective base pay ranges, as 

shown in figure 3 in the report. For example, the actual average base pay 

for examiners at OCC ($92,371) is 52 percent of the maximum pay range of 

$177,600. However, actual average base pay as a percentage of maximum 

pay can vary considerably, as in the case of SEC attorneys. Their actual 

average base pay ($124,379) is 98 percent of the maximum pay range of 

$126,987. 

According to agency officials, two factors affect where actual average base 

pay falls within an agency’s pay range. One is the distribution of the length 

of service among employees. For example, the actual average base pay for 

agencies with a higher proportion of long-tenured employees would be 

closer to the maximum of its pay range. Conversely, actual average base 

pay for agencies with a higher proportion of new hires would fall closer to 

the minimum of the pay scale. An OCC official told us that despite the fact 

that OCC also has a large number of experienced examiners, the actual 

average pay for OCC examiners may seem low compared to other agencies 

because OCC has hired a large number of examiners during the last 2 years. 

Officials from several federal regulators also told us that they rarely hire at 

the lower grade level for some occupations. For example, FHFB tends to 

hire mid-level employees because its relatively small office cannot afford a 

long training period for new hires. 

As shown in table 2 in the report, locality pay percentages vary among 

agencies for the same duty station. Table 8 shows the methods that 

agencies are currently using to determine their respective locality pay 

percentages and adjustments.

4

We did not include the Federal Reserve Board and OFHEO in our example on differences in 

agencies’ base pay because the Federal Reserve Board and OFHEO’s base pay include the 

element equivalent to other agencies’ locality pay for Washington, D.C. 
Appendix IV

Actions Taken by Financial Regulators to 

Seek to Maintain Pay and Benefits 

Comparability and Pay and Benefits Data

Page 95 GAO-07-678 Financial Regulators

Table 8: Agencies’ Current Methods for Determining Locality Pay Percentages and Adjustments

Source: GAO analysis of agency information. 

The benefits that the 10 financial regulators offered also varied. Although 

all of the agencies offer standard federal government benefits, there are 

variations in the extent of agency contributions and types of additional 

benefits these agencies offer. For example, all financial regulators offer the 

Federal Employees Health Benefits program, but agency contributions 

differ. Some agencies pay for a percentage of the health premium (e.g. 70 

percent at FCA and 90 percent at OFHEO). CFTC contributes 100 percent 

for reservists called to active duty. The following are selected examples of 

the additional benefits that some financial regulators offer as of September 

2006 unless noted otherwise: 

• Five of the 10 regulators— FDIC, FHFB, the Federal Reserve Board, 

OCC, and OTS—offer their employees 401(k) retirement savings plans 

with varying employer contributions. In addition, all agencies except the 

Federal Reserve Board offer the federal Thrift Savings Plan.5

Agency Methods for determining locality pay percentages and adjustments

CFTC Uses OPM locality percentages.

FCA Uses the average rate of 5 FIRREA agencies: FDIC, FHFB, NCUA, OCC, and OTS.

FDIC Uses a formula jointly developed by the National Treasury Employees Union and FDIC primarily 

based on the Bureau of Labor Statistics National Compensation Survey Cost of Labor data for 

federally defined locality pay areas, with Runzheimer International cost of living data influence for 

a very few areas where there are extreme differences between cost of living and cost of labor.

FHFB For Washington, D.C., considers other federal bank regulatory agencies per FHFB’s 

comparability statute. For other locations, uses FDIC locality pay percentages.

Federal Reserve Board Not Applicable. Washington, D.C., is the only duty station.

NCUA Considers other FIRREA agencies.

OCC Uses primarily cost of labor data from the Economic Research Institute.

OFHEO Not Applicable. Washington, D.C., is the only duty station. 

OTS Uses Runzheimer International cost of living data. 

SEC Currently adjusts yearly locality pay percentage increases by at least the minimum recommended 

OPM locality incremental adjustment.

5

In addition to these five agencies, FCA offered a 401(k) plan but discontinued it in 

December 2006.
Appendix IV

Actions Taken by Financial Regulators to 

Seek to Maintain Pay and Benefits 

Comparability and Pay and Benefits Data

Page 96 GAO-07-678 Financial Regulators

• The Federal Reserve Board and OCC offer domestic partner benefits for 

some types of plans.

• FCA and SEC offer child care subsidies, and FDIC and OTS offer on-site 

day care. 

• FCA, FDIC, FHFB, and OCC reimburse employee expenses related to 

items such as fitness, recreation, and adoption in their wellness 

accounts. Amounts differ from $250 per year at FDIC to $700 per year at 

FHFB. 

According to agency officials, a number of factors have influenced their 

pay and benefits policies and could have contributed to the variations in 

their pay ranges and benefits. For example, the length of time an agency 

has been under the comparability requirements and related compensation 

flexibility provisions affected compensation. CFTC and SEC officials told 

us that because their agencies received pay and benefits flexibilities and 

were put under a comparability requirement much later (in 2002) than the 

six FIRREA agencies (in 1989), CFTC and SEC have taken an incremental 

approach to slowly increase their pay and benefits to close the gap with the 

other financial regulators. According to a CFTC official, this would allow 

time for employee input and acceptance while building agency capacity to 

manage the authority. Budgetary constraints represent another factor. 

OFHEO officials told us that OFHEO did not implement a new 401(k) 

retirement savings plan recommended by its external compensation 

consultant, Watson Wyatt, in its 2005 comparability survey because OFHEO 

is working to control the growth of its personnel expenses and because 

budget limitations resulting from being part of the appropriations process 

has caused OFHEO to curtail new benefits programs. Furthermore, agency 

officials said that an agency has to consider the particular needs and 

preferences of the agency’s workforce as well as ways to attract and retain 

its workforce. For example, CFTC added a fully paid dental benefit as a 

result of an online vote by employees on preferred benefits options. FDIC 

officials indicated that its employees greatly value the matching 

contribution FDIC provides on its 401(k) plan, and found that the matching 

contribution is also an effective retention tool. Similarly, OCC added a 

401(k) retirement savings plan in order to attract and retain employees. 

According to an SEC official, SEC uses a student loan repayment benefit 

because the benefit helps to attract and retain employees, many of whom 

are recent law school graduates. Agency officials emphasized that it was 

not their goal to have identical pay and benefits packages; rather, they 

considered pay and benefits as a total package when seeking to maintain 
Appendix IV

Actions Taken by Financial Regulators to 

Seek to Maintain Pay and Benefits 

Comparability and Pay and Benefits Data

Page 97 GAO-07-678 Financial Regulators

pay and benefits comparability and when setting pay and benefits policies 

aimed at recruiting and retaining employees. See table 9 for more detailed 

information on the benefits that the 10 financial regulators offer. 

The following table lists selected benefits identified by 10 financial 

regulators as of September 2006, unless otherwise noted in the table. We 

included the following categories of benefits: insurance, pre-tax benefits, 

child care, leave, travel and relocation, educational and professional 

expenses, retirement, work/life benefits, and other benefits and payments. 
Appendix IV

Actions Taken by Financial Regulators to 

Seek to Maintain Pay and Benefits 

Comparability and Pay and Benefits Data

Page 98 GAO-07-678 Financial Regulators

Table 9: List of Benefits Offered by the 10 Financial Regulators

Benefit CFTC FCA FDIC FHFB

Insurance

Health 

(through OPM's Federal 

Employees Health Benefits 

program)

Yes--agency pays 100%

for reservists called to 

active duty

Yes--agency pays 70% Yes--agency pays 85 - 

88.75%

Yes--agency pays 85%

Dental 

(through OPM's Federal 

Employees Dental and Vision 

Insurance program as of 

January 2007)

Yes Yes Yes Yes

Dental 

(through agency)

Yes--agency pays 100%

of premium, annual limit 

of $1,500

No Yes--agency pays 80%

(beginning in January 

2007)

Yes--agency pays 100%, 

annual limit of $2,000

Vision

(through OPM's Federal 

Employees Dental and Vision 

Insurance program as of 

January 2007)

Yes Yes Yes Yes

Vision 

(through agency)

No No Yes--agency pays 80%

(beginning in January 

2007)

Yes--agency pays 100%

Life 

(through OPM's Federal 

Employees' Group Life 

Insurance program)

Yes Yes Yes Yes

Life 

(through agency)

No No Yes--agency pays 

100%, if employee 

waives FEGLI; limit is 

$800,000

No

Long-term care 

(through OPM's Federal Long 

Term Care Insurance program)

Yes Yes Yes Yes

Long-term care 

(through agency)

No No No No
Appendix IV

Actions Taken by Financial Regulators to 

Seek to Maintain Pay and Benefits 

Comparability and Pay and Benefits Data

Page 99 GAO-07-678 Financial Regulators

Federal 

Reserve Board NCUA OCC OFHEO OTS SEC

Yes--agency pays 72%

on average

Yes Yes--agency pays 

72% plus $25 

subsidy per pay 

period

Yes--agency pays 

90%

Yes--agency pays 

$300

Yes--agency pays $25 

or $50 subsidy per pay 

period for self only or 

self and family 

coverage, respectively

Yes Yes Yes Yes Yes Yes

Yes--agency pays 

80%, annual limit of 

$1,000 to $3,000, 

depending on plan, 

beginning January 

2007

No Yes--agency pays 

100%, annual limit of 

$2,500

Yes--agency pays 

100%, annual limit 

of $2,500

No Yes--agency pays 

100% of monthly 

premiums

Yes Yes Yes Yes Yes Yes

Yes--agency pays 50%

of premium (beginning 

in January 2007), 

employees pay $15 

copay

No Yes--agency pays 

100% of premiums

Yes--agency pays 

100% of premiums, 

employees pay $10 

copay

No Yes--agency pays 

100% of monthly 

premiums

Yes Yes Yes Yes Yes Yes

Yes--basic rate (of 

$.44 per $1,000) is 

subsidized 1/3 through 

agency; also, personal 

accident insurance is 

provided - employee 

pays 100%

No Yes--agency 

contributes to cost, if 

employee waives 

FEGLI

No Yes--agency pays 

100%; employee 

pays 100% of 

optional coverage

No

Yes Yes Yes Yes Yes Yes

Yes No No No No No
Appendix IV

Actions Taken by Financial Regulators to 

Seek to Maintain Pay and Benefits 

Comparability and Pay and Benefits Data

Page 100 GAO-07-678 Financial Regulators

Long-term disability No Yes--benefit is 60% of 

employee monthly 

earnings, $100/month 

with limit of 

$8,000/month

Yes--agency pays 

100% for standard 

option, employee pays 

some for high option

No

Short-term disability No No No No

Domestic partner health benefits No No No No

Business travel insurance 

(employer paid)

No Yes Yes No

Prepaid legal/professional 

liability insurance 

Yes--professional liability 

insurance for managers 

where agency pays 50%

of premiums up to 

$200/year 

Yes--employee pays 

100%

No No

Cafeteria plan No No Includes FDIC's dental, 

vision, life, long-term 

disability, and health 

care and dependentcare flexible spending 

accounts

No

Other No No No No

Pre-Tax 

Pre-tax health premiums 

(through OPM’s Federal 

Employees Health Benefits 

program or agency programs)

Yes--for FEHB Yes--70 to 75%

depending on the cost of 

the employee's health 

plan

Yes--for FEHB; agency 

dental, vision, and long 

term disability. 

Beginning in January 

2007, dental and vision 

premiums through 

OPM's program will 

also be on a pre-tax 

basis

Yes--for FEHB 

(Continued From Previous Page)

Benefit CFTC FCA FDIC FHFB
Appendix IV

Actions Taken by Financial Regulators to 

Seek to Maintain Pay and Benefits 

Comparability and Pay and Benefits Data

Page 101 GAO-07-678 Financial Regulators

Yes--agency pays 60%

of employee salary 

No Yes--agency pays 

100%, limit of 

$10,000/month

No Yes--agency pays 

100%

No

No No Yes No No No

Yes--agency 

reimburses up to 72%

of cost of individual 

outside premium for 

domestic partner 

No Yes No No No

Yes--agency pays 

100%, $500,000 

maximum

No Yes--agency pays 

100%, $750,000 

maximum

No Yes--agency pays 

100%

No

Yes--employee pays 

100%

No Yes--$150 for 

professional liability 

insurance 

Yes--up to $150 per 

year for professional 

liability insurance

No Yes—professional 

liability insurance 

where agency pays 

50% of premium 

toward private 

insurance

No No No No No No

Yes--agency offers 

homeowners, liability, 

automobile, and boat 

insurance; personal 

accident, employee 

pays 100%

No No No No No

Yes--for FEHB, 

FEDVIP, agency dental 

and vision

Yes Yes--for FEHB Yes Yes Yes--for FEHB 

Federal 

Reserve Board NCUA OCC OFHEO OTS SEC
Appendix IV

Actions Taken by Financial Regulators to 

Seek to Maintain Pay and Benefits 

Comparability and Pay and Benefits Data

Page 102 GAO-07-678 Financial Regulators

Dependent care flexible 

spending account

(through OPM's flexible 

spending account program)

Yes Yes No--but employees 

may participate in the 

FDIC flexible spending 

account, same dollar 

limits as OPM's 

program

Yes

Health care flexible

spending account 

(through OPM's flexible 

spending account program)

Yes Yes No--but employees 

may participate in 

FDIC flexible spending 

account, same dollar 

limits as OPM's 

program 

Yes

Pre-tax agency contribution No $750 to be allocated 

between dependent care 

and health care 

accounts

No No

Other

Child care

Child care centers

--available on-site

No No Yes--at the Virginia 

Square and 

headquarters office

No

Child care subsidy No Yes--ranges from 25 - 

70%, depending on 

income

No No

Other No No No No

(Continued From Previous Page)

Benefit CFTC FCA FDIC FHFB
Appendix IV

Actions Taken by Financial Regulators to 

Seek to Maintain Pay and Benefits 

Comparability and Pay and Benefits Data

Page 103 GAO-07-678 Financial Regulators

No--but employees 

may participate in the 

FRB flexible spending 

account, same dollar 

limits as OPM’s 

program

Yes No--but employees 

may participate in 

the OCC flexible 

spending account, 

same dollar limits as 

OPM's program

Yes No--but 

employees may 

participate in the 

OTS flexible 

spending account

Yes

No--but employees 

may participate in FRB 

flexible spending 

account, same dollar 

limits as OPM’s 

program

Yes No--but employees 

may participate in 

OCC flexible 

spending account, 

same dollar limits as 

OPM's program

Yes No--but 

employees may 

participate in the 

OTS flexible 

spending account 

Yes

Dependent care credit 

of $1,000 for 

employees enrolled in 

dependent care 

flexible spending 

account earning less 

than $100,000 

(effective January 

2007)

No No No OTS provides 

credit of $1,000

No

Parking flexible 

spending account. 

Employees may set 

aside up to $215 for 

qualified parking 

expenses

No No No No--but available 

on-site through OTS

Yes--but not 

subsidized 

No--but opening in fall 

2007

No No No No No Yes--ranges from 20 - 

50%, depending on 

income

Dependent care 

referral service and 

subsidized 

back-up and 

emergency care 

covering both children 

and adults (beginning 

January 2007)

No No No No Subsidized back-up 

childcare

Federal 

Reserve Board NCUA OCC OFHEO OTS SEC
Appendix IV

Actions Taken by Financial Regulators to 

Seek to Maintain Pay and Benefits 

Comparability and Pay and Benefits Data

Page 104 GAO-07-678 Financial Regulators

Leave

Annual leave

(same accrual rate as federal 

government, unless noted)

Yes Yes Yes--but senior 

executives may accrue 

8 hours/pay period 

without regard to years 

of service

Yes--but senior 

executives may accrue 8 

hours/pay period without 

regard to years of 

service

Sick leave - personal

and family 

(same accrual rate as federal 

government, unless noted)

Yes Yes Yes Yes 

Time-off awards Yes Yes Yes Yes

Credit time Yes Yes Yes Yes

Family and Medical Leave Act 

(up to 12 weeks of unpaid leave 

per year)

Yes Yes Yes Yes

Compensatory time Yes--for approved extra 

work hours, official 

travel, etc., within OPM 

and agency limits

Yes Yes Yes

Other OPM Maternity/ 

paternity leave, leavesharing program

Leave-sharing program Leave-donation 

program

No

Travel and Relocation 

Transit benefits Yes Yes Yes Yes

Travel expenses Yes Yes Yes Yes

Relocation expenses Yes Yes Yes Yes

Home marketing incentive 

payments

Yes Yes No No

Other No Yes--Loss on home 

sale, with deductible of 

1st 5% of loss, and 

maximum of $20,000

Yes--Travel Impact 

Program where 

employees who travel 

more than 50 nights in 

fiscal year receive extra 

compensation

Educational and Professional Expenses 

Student loan repayment No Yes No Yes

Training (internal and external) Yes Yes Yes Yes

(Continued From Previous Page)

Benefit CFTC FCA FDIC FHFB
Appendix IV

Actions Taken by Financial Regulators to 

Seek to Maintain Pay and Benefits 

Comparability and Pay and Benefits Data

Page 105 GAO-07-678 Financial Regulators

Yes Yes Yes--but senior 

executives may 

accrue 8 hours/pay 

period without 

regard to years of 

service

Yes Yes Yes

Yes Yes Yes Yes Yes Yes

No Yes Yes Yes No Yes

No Yes Yes Yes No Yes

Yes Yes Yes Yes Yes Yes

Yes Yes Yes Yes Yes--but used 

rarely

Yes

Emergency leave bank No Leave-sharing 

program

No No No

Yes Yes Yes Yes Yes Yes

Yes Yes Yes Yes Yes Yes

Yes--4-tier program 

based on employee 

position

Yes Yes Yes Yes Yes

Yes No Yes No No No

 Yes--Travel Impact 

Program, loss on 

home sale; 

mortgage subsidy; 

renter subsidy; 

spouse/domestic 

partner career 

assistance; leasebreaking expense

No

No No No No No Yes

Yes Yes Yes Yes Yes Yes

Federal 

Reserve Board NCUA OCC OFHEO OTS SEC
Appendix IV

Actions Taken by Financial Regulators to 

Seek to Maintain Pay and Benefits 

Comparability and Pay and Benefits Data

Page 106 GAO-07-678 Financial Regulators

Academic degree training No Yes--if relevant to 

position

Yes--pilot MBA 

program for 10 

candidates

No

Professional credential 

expenses

No Yes Yes--up to $250/year Yes

Payment of professional 

organization fees/dues

No Yes Yes Yes

Retirement

Retirement 

(through OPM's Federal 

Employees Retirement System 

or Civil Service Retirement 

System 

Yes Yes Yes Yes 

Retirement

(through agency)

No No No No

Phased retirement No No No No

Federal Thrift Savings Plan Yes Yes Yes Yes 

Agency 401(k) plan No No--discontinued in 

December 2006

Yes--5% agency 

matching contribution

Yes--3% agency 

matching contribution

Disability retirement

(through OPM's program)

Yes Yes Yes Yes

(Continued From Previous Page)

Benefit CFTC FCA FDIC FHFB
Appendix IV

Actions Taken by Financial Regulators to 

Seek to Maintain Pay and Benefits 

Comparability and Pay and Benefits Data

Page 107 GAO-07-678 Financial Regulators

Yes--if relevant to 

position; also 

reimbursement for 

books and certain fees

Yes--if relevant to 

position

Yes No Yes Yes--if relevant to 

position

Yes--for bar dues, CPA 

exams, and bar review

No Yes Yes--but only for 

study programs and 

exams associated 

with position-related 

professional 

credentials

No No

No No Yes No Yes No

Yes--for certain 

positions

Yes Yes Yes Yes Yes

Yes--majority of 

employees are 

covered by the Federal 

Reserve System Plan. 

Agency pays 100% for 

employees hired after 

12-31-1983; those 

hired before 1-1-1984 

pay 7% of salary for a 

CSRS-like defined 

benefit plan that is not 

integrated with Social 

Security

No No No Yes--for a 

grandfathered 

group of 

employees

No

No No No No No No

No Yes Yes Yes Yes Yes

Yes--$.80 on the $1 up 

to 6% agency 

matching contribution 

for the first 5 years of 

service; after that, $1 

for $1 up to 6%

No Yes--2% automatic 

agency 

contribution, 

additional 1%

agency matching 

contribution

No Yes--2% agency 

matching 

contribution for 

employees 

covered by 

FERS/CSRS, 7%

match for 

employees under 

agency program

No

No Yes Yes Yes Yes Yes

Federal 

Reserve Board NCUA OCC OFHEO OTS SEC
Appendix IV

Actions Taken by Financial Regulators to 

Seek to Maintain Pay and Benefits 

Comparability and Pay and Benefits Data

Page 108 GAO-07-678 Financial Regulators

Disability retirement

(through agency)

No No No No

Retiree health benefits

(through OPM's program)

Yes Yes Yes Yes

Retiree health benefits (through 

agency)

No No No No

Retiree life insurance

(through OPM's program)

Yes Yes Yes Yes

Retiree life insurance

(through agency)

No No Yes No

Voluntary Early Retirement 

Authority

Yes Yes Yes As necessary

Work/Life Benefit

Alternative work schedules Yes Yes Yes Yes

Telework Yes Yes Yes Yes

Part-time work Yes Yes Yes Yes

Job sharing No Yes Yes No

Lifecycle or wellness account No Yes--$400 per year

reimbursement of 

expenses related to 

adoption, 

fitness/recreation, 

insurance premiums, 

and child care and elder 

care

Yes--$250/year 

reimbursement of 

eligible expenses 

related to different life 

stages

Yes--$700/year 

reimbursement for 

physical fitness and 

health-related expenses

Parking Yes--for limited senior 

staff and those with 

medical need

Yes--no-cost parking 

garages in all locations

Yes--free to senior 

executives in 

headquarters; for some 

locations, free for all 

other employees

Yes--on-site, reduced 

cost parking

Technology equipment or 

services

(e.g., laptop computer, cellular 

phone, blackberry services, 

high-speed Internet at home) 

Yes--for limited senior 

and continuity staff

Yes—high-speed 

Internet at home for 

business needs; 

blackberries, cellular 

phones to senior 

executives and others 

with business needs; 

laptop computer to all 

staff.

Yes--for senior 

executives; selected 

examiners participating 

in telework program 

receive 

reimbursements for 

multiple telephone 

lines or high-speed 

Internet. 

Yes--for executives and 

certain emergency 

employees

Subsidized on-site cafeteria No Yes Yes No

Business casual dress Yes Yes Yes Yes

Retirement planning services Yes Yes Yes Yes

(Continued From Previous Page)

Benefit CFTC FCA FDIC FHFB
Appendix IV

Actions Taken by Financial Regulators to 

Seek to Maintain Pay and Benefits 

Comparability and Pay and Benefits Data

Page 109 GAO-07-678 Financial Regulators

Yes No No No Yes No

Yes Yes Yes Yes Yes Yes

No No No No Yes No

Yes Yes Yes Yes Yes Yes

Yes (participants prior 

to 1-1- 2005 only)

No Yes No Yes No

Yes No Yes No No No--expired in 

September 2006

Yes Yes Yes Yes Yes Yes

Yes Yes Yes Yes Yes Yes

Yes Yes Yes Yes Yes Yes

Yes No Yes No No Yes

No No Yes--$600 per year No No No

Yes--limited based on 

position, requests, car 

pools

Yes Yes--on-site 

reduced-cost 

parking; 

Yes--but a limited 

number

Yes--but limited Yes--for senior officers

Yes Yes--dependent 

upon position

Yes Yes--dependent 

upon position

Yes--but limited Yes--but limited

Yes No Yes No No No

Yes Yes Yes Yes Yes Yes

Yes Yes Yes No No Yes

Federal 

Reserve Board NCUA OCC OFHEO OTS SEC
Appendix IV

Actions Taken by Financial Regulators to 

Seek to Maintain Pay and Benefits 

Comparability and Pay and Benefits Data

Page 110 GAO-07-678 Financial Regulators

Employee assistance programs

(e.g., counseling, referral 

services)

Yes Yes Yes Yes 

Physical exam program Yes--a limited number of 

free exams annually

Yes--$150/year 

reimbursement for 

exams

No No

Fitness centers Yes--at headquarters 

and largest regional 

office

Yes--at headquarters Yes--at headquarters 

and Virginia Square 

office

Yes

On-site defibrillator No Yes Yes Yes

On-site health unit Yes No Yes--at headquarters 

and limited regional 

offices

No

Other medical services/exams Yes Yes--flu shots Yes--annual health fair, 

flu shots, free 

screenings -- lipid 

profile, glaucoma, 

bone density, blood 

pressure, 

mammography, 

prostate, and skin 

cancer

No

Other Benefits and Payments

Severance pay Yes Yes Yes Yes

Workers compensation Yes Yes Yes Yes

Death benefits Yes Yes Yes Yes

Survivor benefits Yes Yes Yes Yes

Voluntary Separation Incentive 

Payments 

No No Yes Yes--As necessary

(Continued From Previous Page)

Benefit CFTC FCA FDIC FHFB
Appendix IV

Actions Taken by Financial Regulators to 

Seek to Maintain Pay and Benefits 

Comparability and Pay and Benefits Data

Page 111 GAO-07-678 Financial Regulators

Source: GAO analysis of agency data.

Yes Yes Yes Yes Yes Yes--plus 24-hour 

resource and referral 

service for all 

employees

Yes--free, on-site 

exams every years for 

employees over age 

35

Yes--annual 

physical exam for 

senior staff; exam 

for other staff every 

2 or 3 years 

depending on age

Yes--$200 or 

$300/year, 

depending on 

position; 

reimbursement for 

routine physical 

exam by a physician 

of their choice

No No Yes--annual physical 

exams at on-site health 

units

Yes Yes Yes--at headquarters Yes Yes Yes--at headquarters 

locations

Yes Yes Yes Yes Yes Yes

Yes No Yes--but limited to 

several times a week

No No Yes--at two 

headquarters locations

Yes Yes--annual 

physical exam for 

senior staff; exams 

for other staff every 

one to three years

Yes--annual health 

fair, flu shot, 

screenings, blood 

pressure, and 

cholesterol

Yes--annual health 

fair with screenings 

for prostate cancer, 

cholesterol, and 

blood pressure

Yes--annual 

health fair

Yes--flu shots, other 

immunizations, 

smoking cessation, 

cardiac risk profiles, 

and health 

consultations

Yes Yes Yes Yes Yes No

Yes Yes Yes Yes Yes Yes 

Yes Yes Yes Yes Yes Yes 

Yes Yes Yes Yes Yes No

No No Yes—As necessary No No Yes--limited through 

9/30/07

Federal 

Reserve Board NCUA OCC OFHEO OTS SEC
Page 112 GAO-07-678 Financial Regulators

Appendix V

Analysis of Movement Data of Financial 

Regulator Employees from Fiscal Years 1990 

through 2006 ApendxiV

We reviewed the movement of financial regulator employees from fiscal 

year 1990 through 2006 using data from the Central Personnel Data File 

(CPDF). We found that the movement of employees among the financial 

regulators was very low and presented no discernible trend, but that 86 

percent (13,433 of the 15,627) of employees leaving the regulators 

voluntarily (i.e., moving or resigning) resigned from the federal 

government. Our analysis did not include the Federal Reserve Board of 

Governors because CPDF does not contain data from the Federal Reserve 

Board. (For more detail on our methodology, see app. I.) This appendix 

includes additional data for fiscal years 1990 through 2006 on the average 

number of these employees moving among the 9 financial regulators; the 

movement of employees among 9 of the 10 financial regulatory agencies by 

occupation; and employment by occupation and employee movement 

agency snapshots. 

Figure 8 shows the average number of employees in mission-critical and 

other occupations moving among the 9 financial regulators for which we 

have data from fiscal year 1990 through fiscal year 2006. On average, a total 

of 919 employees per year moved or resigned. Movement ranged from an 

average of less than 1 for investigators to an average of over 11 for 

examiners. 
Appendix V

Analysis of Movement Data of Financial 

Regulator Employees from Fiscal Years 1990 

through 2006

Page 113 GAO-07-678 Financial Regulators

Figure 8: Average Number of Employees in Mission-Critical and other Occupations Moving among the 9 Financial Regulators, 

Fiscal Years 1990–2006

Note: This table does not include data for the Federal Reserve Board because CPDF does not include 

data for the agency. The “all other” category combines specialists in occupations such as human 

resources management, administration, clerical, management and program analysis, financial 

administration, and paralegal work.

Table 10 provides the actual number of financial regulator employees for 

whom we had data, by mission-critical and other occupations, who moved 

to another financial regulator from fiscal year 1990 through 2006. 

Tables 11 through 19 provide employment by occupation and movement 

data for 9 of the 10 agencies from fiscal year 1990 through 2006.1

Employees

0

2

4

6

8

10

12

Investigators

Business

specialists

Auditors

Accountants

Economists

Information

technology (IT)

specialists

Financial

analysts

Attorneys

Supervisors

All other

Examiners

Source: GAO analysis of CPDF data.

Position

1

The data in these tables are for permanent employees only.
Appendix V

Analysis of Movement Data of Financial 

Regulator Employees from Fiscal Years 1990 

through 2006

Page 114 GAO-07-678 Financial Regulators

Table 10: Number of Financial Regulator Employees in Mission-Critical and other Occupations Who Moved to another Financial 

Regulator, Fiscal Years 1990–2006 

Fiscal year Accountant Attorney Auditor

Business

Specialist Economist

1990 1 9 000

1991 019 001

1992 2 3 3 0 1

1993 0 3 010

1994 0 3 000

1995 0 3 001

1996 14110

1997 0 3 001

1998 08000

1999 05000

2000 0 9 001

2001 1 3 012

2002 0 7 0 0 1

2003 1 3 011

2004 1 2 0 0 3

2005 0 1 2 1 6

2006 1 3 100
Appendix V

Analysis of Movement Data of Financial 

Regulator Employees from Fiscal Years 1990 

through 2006

Page 115 GAO-07-678 Financial Regulators

Source: GAO analysis of CPDF data.

Note: This table does not include data for the Federal Reserve Board. 

a

Supervisors included executives, who constituted less than 1 percent of all supervisors who moved to 

another financial regulator. 

b

The “all other” category, which combines specialists in occupations such as human resources 

management, administration, clerical, management and program analysis, financial administration, 

and paralegal work. 

c

CFTC officials told us that some employees in the investigation job series 1801 were examiners. 

Because the CPDF cannot distinguish employees in the same job series but in different job titles, we 

called all the CFTC employees classified as 1801 examiners and classified those in job series 1802 

(compliance investigation and support) as investigators at CFTC. 

d

OFHEO officials told us that some employees in the job series 0501 (financial administration and 

program) were examiners; because of limitations of the CPDF we put all employees in job series 0501 

into the examiner job series. 

Examinerd

Financial

Analyst Investigatorc IT Specialist Supervisora All otherb Total

12 1 0 0 9 30 62

12 4 0 3 21 37 97

21 2 0 0 3 19 54

15 1 0 1 3 8 32

81008 3 23

6 2 0 013 11 36

3 00125 18

210171 16

28 0 0 0 4 7 47

14 4 0 2 2 8 35

9 110 3 10 34

15 1 0 2 2 9 36

500 3 7 4 27

2200 3 6 19

17 1 0 2 5 10 41

14 2 0 4 5 7 42

16 2 0 0 8 8 39
Appendix V

Analysis of Movement Data of Financial 

Regulator Employees from Fiscal Years 1990 

through 2006

Page 116 GAO-07-678 Financial Regulators

Table 11: Commodity Futures Trading Commission Employment and Movement Data, Fiscal Years 1990–2006

Employment and movement 1990 1991 1992 1993 1994 1995 1996

Employment

All employees 495 559 570 536 516 507 515

Accountant 0000001

Attorney 65 83 83 73 73 87 100

Auditor 27 29 27 26 24 25 24

Business Specialist 4200000

Economist 35 32 35 34 31 25 26

Examiner 47 64 69 66 66 70 73

Financial Analyst 1111111

Investigator 7 5 7 713 13 15

IT Specialist 15 15 16 15 16 16 17

All other 148 171 174 158 146 139 134

Supervisor 146 157 158 156 146 131 124

Movement

To other financial regulator 10 6 5 1 2 6 1

To other federal agency 16 10 5 6 1 4 2

Resigned 38 28 23 19 27 23 26

Retired 7 2 3 6 10 7 7

Fired, other separations, 

reductions in force 8 1 2 3 0 2 3
Appendix V

Analysis of Movement Data of Financial 

Regulator Employees from Fiscal Years 1990 

through 2006

Page 117 GAO-07-678 Financial Regulators

Source: GAO analysis of CPDF data.

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

521 527 519 515 496 468 492 490 487 446

1100001111

114 119 120 117 113 109 145 142 140 123

25 26 26 27 25 23 23 23 26 26

0000000000

26 27 30 26 26 28 33 35 36 33

66 61 66 68 66 59 57 62 61 59

1 1 3 444 3333

19 20 21 23 22 18 17 14 14 12

19 21 23 25 28 24 28 30 29 29

133 133 129 123 112 102 103 97 92 80

117 118 101 102 100 101 82 83 85 80

3 10 5 7 4 2 2 1 0 3

12 11 12 6 14 8 5 0 3 7

18 28 27 34 20 12 6 15 9 9

6 9 13 5 8 3187 9 33

3 11110 3 3 0 1
Appendix V

Analysis of Movement Data of Financial 

Regulator Employees from Fiscal Years 1990 

through 2006

Page 118 GAO-07-678 Financial Regulators

Table 12: Farm Credit Administration Employment and Movement Data, Fiscal Years 1990-2006

Employment and movement 1990 1991 1992 1993 1994 1995 1996

Employment

All employees 493 491 458 427 398 371 321

Accountant 7 8 9 8767

Attorney 11 17 16 12 11 10 9

Auditor 4102211

Economist 3 4 333 2 1

Examiner 243 219 216 193 176 165 140

Financial Analyst 12 14 10 9 876

Investigator 0001111

IT Specialist 21 23 22 23 27 24 21

All other 109 124 117 110 100 94 74

Supervisor 83 81 65 66 63 61 61

Movement

To other financial regulator 12 1 7 5 4 1 0

To other federal agency 7 9 16 2 1 2 4

Resigned 46 31 27 19 9 10 24

Retired 7 4 5 4 17 6 9

Fired, other separations,

reductions in force 6 0 7 3 2 6 12
Appendix V

Analysis of Movement Data of Financial 

Regulator Employees from Fiscal Years 1990 

through 2006

Page 119 GAO-07-678 Financial Regulators

Source: GAO analysis of CPDF data.

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

290 287 289 269 263 258 266 275 252 248

9 886555545

9 10 11 11 13 11 11 11 11 12

1000111111

1 2 33333 2 3 3

126 125 124 115 110 108 113 122 114 115

4556676752

1111111110

22 21 22 20 17 18 15 17 17 15

74 74 74 64 65 61 65 64 57 51

43 41 41 43 42 43 46 45 39 44

1401111222

7 1 3 7 4 3 104 3

8 6 12 11 3 41565

9 8 2 4 11 4 6 7 15 15

14 4 0 1 0 0 0 1 2 1
Appendix V

Analysis of Movement Data of Financial 

Regulator Employees from Fiscal Years 1990 

through 2006

Page 120 GAO-07-678 Financial Regulators

Table 13: Federal Deposit Insurance Corporation Employment and Movement Data, Fiscal Years 1990–2006

Employment and movement 1990 1991 1992 1993 1994 1995 1996

Employment

All employees 7,839 9,429 9,863 9,564 9,061 8,438 7,662

Accountant 107 132 88 115 102 145 133

Attorney 464 613 604 525 539 476 405

Auditor 93 167 193 166 152 147 150

Business Specialist 204 212 122 62 50 65 41

Economist 17 15 11 12 12 13 12

Examiner 2,808 3,098 3,162 3,084 2,778 2,511 2,087

Financial Analyst 778 684 373 653 693 505 409

Investigator 4 45 57 54 45 43 38

IT Specialist 156 310 289 269 270 283 278

All other 1,985 2,510 2,780 2,706 2,569 2,750 2,760

Supervisor 1,223 1,643 2,184 1,918 1,851 1,500 1,349

Movement

To other financial regulator 5 3 9 7156

To other federal agency 21 29 48 18 17 44 22

Resigned 340 384 412 426 432 344 662

Retired 38 56 73 58 96 71 389

Fired, other separations,

reductions in force 26 24 21 30 50 55 22
Appendix V

Analysis of Movement Data of Financial 

Regulator Employees from Fiscal Years 1990 

through 2006

Page 121 GAO-07-678 Financial Regulators

Source: GAO analysis of CPDF data.

Note: During some of the time under review, FDIC was actively downsizing its workforce and achieved 

that in part by providing buyouts and other incentives for employees to leave. 

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

6,813 6,616 6,627 6,386 6,212 5,822 5,384 5,259 4,516 4,328

110 95 90 86 83 81 58 56 66 58

336 291 299 269 261 210 203 203 187 175

133 117 115 113 110 73 67 68 61 45

57 55 52 56 234 250 253 242 83 78

27 34 39 37 37 41 39 36 37 42

1,883 2,343 2,434 2,324 2,215 2,195 2,091 2,026 1,895 1,814

252 218 221 201 113 100 96 98 91 82

31 28 27 31 36 33 30 34 32 33

266 296 326 324 328 327 312 306 252 252

2,506 2,008 1,942 1,903 1,827 1,693 1,490 1,474 1,181 1,136

1,212 1,131 1,082 1,042 968 819 745 716 631 613

1 21 14 5 10 15 3 11 22 17

37 28 25 31 14 52 28 20 56 12

487 200 171 200 134 212 98 89 182 103

229 161 110 140 116 464 123 105 453 144

61 66 32 52 21 51 55 25 74 17
Appendix V

Analysis of Movement Data of Financial 

Regulator Employees from Fiscal Years 1990 

through 2006

Page 122 GAO-07-678 Financial Regulators

Table 14: Federal Housing Finance Board Employment and Movement Data, Fiscal Years 1990–2006

Employment and movement 1990 1991 1992 1993 1994 1995 1996

Employment

All employees 53 90 96 97 90 91 102

Accountant 0000001

Attorney 2 0 3 2222

Auditor 0100000

Business Specialist 0000000

Economist 1000000

Examiner 0000000

Financial Analyst 3 8 10 7 5 7 6

IT Specialist 0111122

All other 28 35 34 37 35 30 35

Supervisor 19 45 48 50 47 50 56

Movement

To other financial regulator 0110110

To other federal agency 0 6 3 1000

Resigned 4 1 6 10 13 10 3

Retired 1000102

Fired, other separations, 

reductions in force 1 0 0 1 0 2 2
Appendix V

Analysis of Movement Data of Financial 

Regulator Employees from Fiscal Years 1990 

through 2006

Page 123 GAO-07-678 Financial Regulators

Source: GAO analysis of CPDF data.

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

101 104 107 100 97 101 85 94 81 122

1 3 4 4 4 4 4 4 22

2 8 10 5 7 5 4 3 6 6

1 2 2 1 1 1 0 1 22

0 1 1 0 0 1 0 0 00

0 1 3 3 7 8 5 4 17

008 9 9 11 17 17 27 36

5 20 10 11 11 10 11 15 10 21

2 3 3 5 5 5 2 2 02

30 45 47 38 37 38 19 19 19 24

60 21 19 24 16 18 23 29 14 22

2 0 3 1 2 1 0 4 24

16124 3 6 2 21

2447452 3 3 4

1 1 119 0442 3 3

210 3 1 013 1 00
Appendix V

Analysis of Movement Data of Financial 

Regulator Employees from Fiscal Years 1990 

through 2006

Page 124 GAO-07-678 Financial Regulators

Table 15: National Credit Union Administration Employment and Employee Movement Data, Fiscal Years 1990–2006

Employment and movement 1990 1991 1992 1993 1994 1995 1996

Employment

All employees 717 917 907 909 876 878 890

Accountant 1211454

Attorney 5 4 2 2 12 14 13

Auditor 458 667 655 636 599 526 429

Economist 1100100

Examiner 18 17 10 11 3 81 203

Financial Analyst 1111 3 6 6

Investigator 1111111

IT Specialist 1 23 18 16 23 25 24

All other 107 123 129 129 125 124 125

Supervisor 124 78 90 112 105 96 85

Movement

To other financial regulator 0520101

To other federal agency 2 7 3 1444

Resigned 38 36 23 22 28 34 35

Retired 11 9 6 3 17 18 7

Fired, other separations, 

reductions in force 1 5 5 9 10 4 3
Appendix V

Analysis of Movement Data of Financial 

Regulator Employees from Fiscal Years 1990 

through 2006

Page 125 GAO-07-678 Financial Regulators

Source: GAO analysis of CPDF data.

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

883 838 930 954 936 946 918 890 896 919

2244444 3 4 5

14 14 16 16 16 16 16 14 17 17

856454 3 4 3 3

0 0 0 0 0 0 0 0 11

684 655 723 734 718 689 607 595 584 607

777 9 9 8 7 7 65

1 1 2 2 2 2 2 2 22

20 19 23 23 28 28 27 28 25 27

120 112 131 130 128 131 122 113 121 125

27 23 18 32 26 64 130 124 133 127

0 1 1 1 0 2 0 2 21

3 9 466452 3 4

49 55 42 39 30 15 12 15 27 24

14 20 10 15 15 16 18 33 37 17

55764 3 3 14 9 8
Appendix V

Analysis of Movement Data of Financial 

Regulator Employees from Fiscal Years 1990 

through 2006

Page 126 GAO-07-678 Financial Regulators

Table 16: Office of the Comptroller of the Currency Employment and Employee Movement Data, Fiscal Years 1990–2006

Employment and movement 1990 1991 1992 1993 1994 1995 1996

Employment

All employees 3,218 3,344 3,628 3,962 3,898 3,573 3,297

Accountant 18 15 15 22 19 23 25

Attorney 79 89 89 94 95 109 99

Business Specialist 2222111

Economist 12 21 23 23 30 36 37

Examiner 2,076 2,161 2,393 2,685 2,598 2,245 1,997

Financial Analyst 10 13 13 15 16 17 17

IT Specialist 82 91 99 114 115 124 125

All other 555 598 631 664 679 673 651

Supervisor 384 354 363 343 345 345 345

Movement

To other financial regulator 9 5 5 3 1 6 3

To other federal agency 15 16 12 11 7 7 4

Resigned 216 164 195 196 233 298 256

Retired 18 33 14 13 21 100 23

Fired, other separations,

reductions in force 9 13 19 15 18 11 31
Appendix V

Analysis of Movement Data of Financial 

Regulator Employees from Fiscal Years 1990 

through 2006

Page 127 GAO-07-678 Financial Regulators

Source: GAO analysis of CPDF data.

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

2,742 2,862 2,917 2,781 2,819 2,780 2,748 2,686 2,768 2,908

24 25 26 18 21 26 26 23 22 16

92 99 98 98 89 94 93 91 93 98

1 1 1 0 0 0 0 0 01

34 34 36 31 31 28 30 29 29 34

1,622 1,734 1,735 1,708 1,760 1,719 1,720 1,685 1,762 1,864

17 20 18 13 11 11 12 11 10 13

112 120 137 126 126 121 107 104 101 109

553 580 607 537 531 537 508 502 523 537

287 249 259 250 250 244 252 241 228 236

2 2 7 10 7 5 9 14 8 5

6 6 14 17 23 8 23 8 14 16

394 156 115 159 122 80 71 78 73 91

179 30 20 88 45 29 39 86 50 50

10 4 11 13 14 10 8 18 2 9
Appendix V

Analysis of Movement Data of Financial 

Regulator Employees from Fiscal Years 1990 

through 2006

Page 128 GAO-07-678 Financial Regulators

Table 17: Office of Federal Housing Enterprise Oversight Employment and Employee Movement Data, Fiscal Years 1990–2006

Employment and movement 1990 1991 1992 1993 1994 1995 1996

Employment

All employees 0000 35 61 62

Accountant 0000000

Attorney 0000 3 5 5

Business Specialist 0000000

Economist 0000267

Examiner 00002 3 5

Financial Analyst 0000241

IT Specialist 0 0 0 0 18 27 28

All other 0 0 0 0 5 14 14

Supervisor 0000 3 2 2

Movement

To other financial regulator 0000001

To other federal agency 0000000

Resigned 0000257

Retired 0000000

Fired, other separations, 

reductions in force 0 0 0 0 0 0 0
Appendix V

Analysis of Movement Data of Financial 

Regulator Employees from Fiscal Years 1990 

through 2006

Page 129 GAO-07-678 Financial Regulators

Source: GAO analysis of CPDF data.

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

61 61 68 89 109 110 137 139 192 204

0 0 0 0 0 0 0 4 413

6666 9 55544

0000011110

4 3 12100111

5 3333 28 35 38 64 62

2422200000

31 30 39 61 75 27 40 41 58 64

13 14 16 15 16 19 23 21 24 23

0110 3 30 33 28 36 37

1010 3 00210

333 0001114

6 9 26424866

1000021 3 2 4

1001020214
Appendix V

Analysis of Movement Data of Financial 

Regulator Employees from Fiscal Years 1990 

through 2006

Page 130 GAO-07-678 Financial Regulators

Table 18: Office of Thrift Supervision Employment and Employee Movement Data, Fiscal Years 1990–2006

Employment and movement 1990 1991 1992 1993 1994 1995 1996

Employment

All employees 3,167 2,642 2,378 2,047 1,755 1,481 1,388

Accountant 13 42 38 35 14 13 10

Attorney 64 166 168 149 72 57 50

Specialist 6 31 22 22 6 6 6

Economist 4477665

Examiner 0 1,175 1,071 937 764 645 594

Financial Analyst 13 112 104 81 61 51 48

Investigator 2000000

IT Specialist 47 50 55 48 35 37 36

All other 2,881 1,059 911 767 478 389 370

Supervisor 137 3 2 1 319 277 269

Movement

To other financial regulator 20 66 22 14 12 11 5

To other federal agency 11 17 10 6 6 13 2

Resigned 33 218 201 190 198 152 81

Retired 5 67 25 119 19 33 19

Fired, other separations,

reductions in force 3 35 59 36 42 25 2
Appendix V

Analysis of Movement Data of Financial 

Regulator Employees from Fiscal Years 1990 

through 2006

Page 131 GAO-07-678 Financial Regulators

Source: GAO analysis of CPDF data.

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

1,302 1,253 1,278 1,244 1,183 937 899 872 898 956

10 8 8 8 8 7 10 8 10 10

46 43 41 38 28 22 20 18 18 19

7 8 14 17 13 12 8 6 6 6

66765542 3 3

546 515 537 514 554 488 469 461 467 499

44 44 42 42 38 22 26 26 27 27

0000000000

35 38 39 40 39 35 47 49 47 50

358 352 357 350 278 184 168 157 166 176

250 239 233 229 220 162 147 145 154 166

2 7 3 57144 3 2

3 42886100 3

55 41 21 51 30 12 5 9 10 15

19 26 32 34 53 146 28 29 27 33

5 5 3 10 14 76 1 4 1 4
Appendix V

Analysis of Movement Data of Financial 

Regulator Employees from Fiscal Years 1990 

through 2006

Page 132 GAO-07-678 Financial Regulators

Table 19: Securities and Exchange Commission Employment and Employee Movement Data, Fiscal Years 1990–2006

Employment and movement 1990 1991 1992 1993 1994 1995 1996

Employment

All employees 2,214 2,324 2,540 2,614 2,603 2,719 2,694

Accountant 121 143 159 328 330 334 340

Attorney 474 520 558 577 577 625 641

Auditor 3 3 012 3 3

Business Specialist 0011111

Economist 9 667766

Examiner 175 193 255 117 151 184 192

Financial Analyst 42 38 34 18 17 16 12

Investigator 16 17 31 36 40 39 38

IT Specialist 58 64 79 97 102 113 110

All other 723 716 740 722 690 690 665

Supervisor 593 624 677 710 686 708 686

Movement

To other financial regulator 6 10 3 2161

To other federal agency 41 34 17 9 12 16 16

Resigned 210 142 134 137 186 186 207

Retired 29 20 13 21 28 43 32

Fired, other separations, 

reductions in force 13 9 2 5 28 7 6
Appendix V

Analysis of Movement Data of Financial 

Regulator Employees from Fiscal Years 1990 

through 2006

Page 133 GAO-07-678 Financial Regulators

Source: GAO analysis of CPDF data.

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

2,687 2,656 2,711 2,806 2,914 2,930 3,121 3,589 3,727 3,488

346 335 358 379 409 452 523 668 730 709

644 674 688 784 875 960 1,057 1,144 1,124 1,023

2 3 2 1 2 2 0 0 01

1 0 0 1 1 1 2 223 19

3 6 8 17 18 15 17 19 18 18

195 174 193 178 179 148 158 244 207 149

13 12 8 8 7 8 8 10 7 6

40 34 35 37 36 32 32 32 33 32

111 96 115 119 118 130 135 136 178 166

660 649 634 631 642 620 610 641 649 627

672 673 670 651 627 562 579 693 758 738

4 2 1 4 2 0 0 1 25

24 35 30 35 37 21 20 19 20 20

231 240 188 291 168 106 107 144 189 207

42 47 37 24 21 18 29 22 60 64

10 4 12 7 3 5 5 7 16 8
Appendix V

Analysis of Movement Data of Financial 

Regulator Employees from Fiscal Years 1990 

through 2006

Page 134 GAO-07-678 Financial Regulators

Table 20: Other Federal Agencies Employment and Employee Movement Data, Fiscal Years 1990–2006

Employment and 

movement 1990 1991 1992 1993 1994 1995 1996

Employment

All employees 1,943,615 1,959,655 1,963,728 1,905,028 1,835,449 1,766,783 1,717,727

Accountant 7,632 7,948 8,210 8,168 8,393 8,609 8,715

Attorney 12,910 13,941 14,787 15,082 15,183 16,193 16,626

Auditor 10,693 10,611 10,415 10,262 10,058 10,078 9,801

Business Specialist 12,056 12,535 12,937 12,991 13,140 14,902 15,182

Economist 3,346 3,544 3,655 3,523 3,509 3,566 3,554

Examiner 0112222

Financial Analyst 606 752 795 778 84 733 770

Investigator 31,070 32,286 33,379 33,685 34,981 37,307 39,828

IT Specialist 39,689 41,291 43,275 43,890 44,348 45,448 45,953

All other 1,516,871 1,521,230 1,515,467 1,461,878 1,413,323 1,364,824 1,327,893

Supervisor 308,742 315,516 320,807 314,769 291,728 265,121 249,403

Movement

To financial regulator 497 544 359 198 130 64 57

To other federal agency 17,233 25,209 17,356 15,052 12,643 14,125 12,150

Resigned 81,585 64,794 56,279 56,937 50,928 49,707 49,164

Retired 42,321 43,176 28,809 59,379 65,587 69,628 50,777

Fired, other separations, 

reductions in force 16,642 19,674 16,926 16,762 19,126 18,540 21,765
Appendix V

Analysis of Movement Data of Financial 

Regulator Employees from Fiscal Years 1990 

through 2006

Page 135 GAO-07-678 Financial Regulators

Source: GAO analysis of CPDF data. 

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

1,658,155 1,628,983 1,607,983 1,601,565 1,617,526 1,669,546 1,679,585 1,700,009 1,699,504 1,696,480

8,700 8,580 8,675 8,616 8,815 8,841 8,913 8,834 9,145 9,133

16,821 17,300 17,959 18,157 18,775 19,062 19,286 19,693 19,915 20,453

9,527 9,181 8,875 8,919 8,754 9,099 9,099 8,935 8,775 8,686

14,836 15,173 15,491 16,135 16,830 17,075 17,399 17,561 17,904 17,970

3,570 3,671 3,381 3,389 3,443 3,527 3,697 3,719 3,728 3,281

211 1001 000

793 872 914 868 897 890 932 912 919 924

40,980 43,561 44,095 44,122 44,596 50,738 52,127 52,774 54,517 99,211

45,758 46,264 46,699 47,888 51,863 55,851 57,465 57,683 58,085 57,055

1,281,480 1,257,499 1,239,770 1,232,771 1,244,012 1,281,032 1,287,270 1,304,224 1,298,809 1,250,843

235,688 226,881 222,123 220,699 219,541 223,431 223,396 225,674 227,707 228,924

103 154 177 125 100 43 93 138 112 96

13,515 13,705 13,984 14,307 15,093 15,135 11,596 10,844 13,272 13,450

51,756 50,321 47,976 48,903 44,692 38,859 39,334 40,579 47,408 47,687

55,729 49,091 48,275 44,625 42,150 42,125 50,886 54,373 60,035 58,904

16,109 13,350 13,301 12,623 12,450 13,328 15,828 14,524 15,933 14,929
Page 136 GAO-07-678 Financial Regulators

Appendix VI

Comments from the U.S. Commodity Futures 

Trading Commission ApendxiVI
Appendix VI

Comments from the U.S. Commodity Futures 

Trading Commission

Page 137 GAO-07-678 Financial Regulators
Page 138 GAO-07-678 Financial Regulators

Appendix VII

Comments from the Board of Governors of 

the Federal Reserve System ApendxiVI
Page 139 GAO-07-678 Financial Regulators

Appendix VIII

Comments from the Federal Housing Finance 

Board ApendxiVI
Page 140 GAO-07-678 Financial Regulators

Appendix IX

Comments from the National Credit Union 

Administration ApendxiIX
Appendix IX

Comments from the National Credit Union 

Administration

Page 141 GAO-07-678 Financial Regulators
Appendix IX

Comments from the National Credit Union 

Administration

Page 142 GAO-07-678 Financial Regulators
Appendix IX

Comments from the National Credit Union 

Administration

Page 143 GAO-07-678 Financial Regulators
Page 144 GAO-07-678 Financial Regulators

Appendix X

Comments from the Office of Federal Housing 

Enterprise Oversight ApendxiX
Page 145 GAO-07-678 Financial Regulators

Appendix XI

Comments from the Securities and Exchange 

Commission ApendxiXI
Page 146 GAO-07-678 Financial Regulators

Appendix XII

GAO Contacts and Staff Acknowledgments ApendxiXI

GAO Contacts Orice Williams, (202) 512-8678, or williamso@gao.gov

Brenda Farrell, (202) 512--5140 or farrellb@gao.gov

Staff 

Acknowledgments

In addition to the contacts named above, Belva Martin and Karen Tremba, 

Assistant Directors; Thomas Beall; Amy Friedlander; Robert Goldenkoff; 

Eugene Gray; Simin Ho; Anne Inserra; Janice Latimer; Donna Miller; Marc 

Molino; Jennifer Neer; Barbara Roesmann; Lou Smith; Tonya Walton; 

Lindsay Welter; Gregory Wilmoth; and Robert Yetvin made major 

contributions.

(450460)
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