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Searching for Articles by Benjamin E. Streckert
Benjamin E. Streckert
Wausau Office
Found 3 Results.

When Being a Good Neighbor Can Expose You to Liability

Posted on November 2, 2017, Authored by Joseph M. Mella, Benjamin E. Streckert, Filed under Ag-Visor

In Wisconsin, we have a strong tradition of landowners opening up their land to snowmobile clubs, hunters, trappers, cross-country skiers, and other members of the public. While giving visitors the chance to enjoy the outdoors is a great thing owners can do for their neighbors, it does come with risk. What if a snowmobiler crashes into a downed tree blocking the trail on your land?  Are you, as the owner, liable? Wisconsin law provides a safe zone for landowners in situations like this one, but property owners must still be mindful of the law so as to avoid losing the statutory protections. Landowner Duties In general, landowners owe certain duties to those they allow on their property, including for recreational purposes. These duties can include obligations to inspect the property to make sure that it is safe for the types of activities in which visitors hope to engage, to fix any unsafe conditions, and to warn visitors of any dangerous conditions that cannot be remedied. Failing to meet this fairly high bar could give a visitor who is injured on the property grounds to sue the owner for damages. The Wisconsin legislature recognized that, in many situations, repaying landowners who generously volunteer their properties for public use with this sort of potential for liability was not good public policy. With this in mind, it enacted what is commonly known as the Wisconsin Recreational Immunity Statute (“WRIS”). WRIS Protections The WRIS generally provides that private property owners will not be held liable for death or injury caused by a person engaging in a recreational activity on their property. It also says that, with regard to any person who enters an owner’s property to engage in a recreational activity, an owner does not have any of the usual duties to: keep the property safe for recreational activities; inspect the property for potential hazards; or give warning of an unsafe condition, use, or activity on the property. The statute defines “recreational activity” as “any outdoor activity undertaken for the purpose of exercise, relaxation or pleasure,” including hunting, fishing, trapping, camping, four wheeling, snowmobiling, cross-country skiing, hiking, and “any other outdoor sport, game or educational activity.” With such broad protections, the WRIS gives landowners peace of mind that allowing members of the public onto their land will not expose them to liability for injuries people may suffer or require them to spend time making sure the property is safe for the public. However, the WRIS protections can be lost if owners are not careful. Exceptions The WRIS’s exemption from liability for death or injuries occurring on someone’s property is lost if any one of the following exceptions applies: During the year in which the injury occurs, the property owner receives a total of $2,000 or more of money, goods, or services in payment for use of his or her land.  Therefore, if a landowner receives $2,000 from the local snowmobiling club to run trails through her land, she may be held liable for injuries that occur on her land. The WRIS provides that some “payments” are not included in the $2,000 limit. For example, a gift of wild game or other products resulting from recreational activity (berries, firewood, etc.) are permissible and do not count toward the limit. Similarly, a payment of $5 or less per person per day for permission to gather any “product of nature,” and any donation made for the management and conservation of the land’s resources are excluded as well. The death or injury is caused by a property owner’s malicious act or malicious failure to warn visitors about an unsafe condition. An act or failure to warn is malicious if it “results from hatred, ill will, or a desire for revenge or is inflicted under circumstances where insult or injury is intended.” Merely not knowing about a dangerous condition or acting recklessly is not enough to lose WRIS protections. The death or injury occurs to a social guest who has been specifically invited by the property owner and the accident occurs:  (1) on platted land; (2) on residential property; or (3) within 300 feet of a building on property that is classified as commercial or manufacturing. The WRIS protections are primarily aimed at large tracts of vacant or agricultural land. Therefore, when neighboring hunters or the local snowmobile club come knocking at your door this fall, the WRIS should give you some peace of mind regarding potential liability; but, at the same time, you need to be mindful of its exceptions, especially when it comes to accepting payment. If you have questions regarding the extent of potential liability, it never hurts to reach out to an attorney.   © 2017 Agri-View.  Madison, WI.  Reprinted with permission.

Examiners are Carefully Scrutinizing Financial Institutions’ Compensation Arrangements

Posted on December 13, 2017, Authored by Benjamin E. Streckert, Filed under Banking and Financial Matters

It has come to our attention that some examiners have recently been carefully scrutinizing financial institutions’ employee compensation arrangements. Although it now appears unlikely that the proposed Dodd-Frank rules on financial-institution incentive compensation (which only apply to institutions with at least $1 billion in total assets) will ever take effect, examiners still do take compensation, particularly executive compensation, into account as a part of the regular risk-management, internal controls, and corporate governance examination process. Given the recent scrutiny, it may be prudent to review your institution’s compensation arrangements in light of regulatory guidance on the subject. In 2010, the FDIC and several other regulatory agencies published a final “Guidance on Sound Incentive Compensation Policies”, which is still the most instructive authority. To identify and prevent compensation policies that encourage employees to take inordinate amounts of risk in order to boost their compensation without adequate safeguards or oversight, it requires that all FDIC-supervised institutions apply certain principles in their employee compensation programs. The Guidance provides that, in assessing the general health of each organization, regulators will consider the extent to which “incentive compensation arrangements” are consistent with safety and soundness. “Incentive compensation” is defined as “that portion of an employee’s current or potential compensation that is tied to achievement of one or more specific metrics.” Examples of incentive compensation would include: a bonus paid out upon the organization reaching certain revenue-growth benchmarks; an annual bonus calculated based on fiscal year profits; or stock options that vest upon the organization’s stock reaching a certain price. The Guidance states that, in order to be consistent with safety and soundness, banks need to consider their incentive compensation programs carefully for “covered employees,” which include senior executives and any other employees who, individually or as part of a group, have the ability to expose the banking organization to material amounts of risk.  The Guidance suggests that incentive compensation arrangements that apply to these covered employees should: provide employees incentives that appropriately balance risk and reward; be compatible with effective controls and risk-management; and be supported by strong corporate governance, including active and effective oversight by the organization’s board of directors. The above considerations attempt to ensure that incentive compensation programs align with risk-based concerns. These principles are fairly abstract, but the FDIC does give some ideas of concrete actions institutions can take to ensure that their compensation policies will not be deemed inconsistent with safety and soundness. Simple incentive compensation policies that do not take risk into account, such as awarding an executive an annual bonus upon reaching certain revenue growth benchmarks, do not comply with the standards set forth in the Guidance. However, adding some combination of the following strategies could bring such a policy into compliance: Risk Adjustment Awards. The bonus is adjusted based on measures that take into account the risk the employee’s activities may pose to the organization rather than solely considering profit, revenue, growth, etc. Risk-based measures may be quantitative, or the size of a risk adjustment may be subject to the board of directors’ discretion based on their more general assessment. Deferral of Payment. The actual payout of the bonus is deferred significantly beyond the end of the performance, and the amounts paid are adjusted for actual losses or other aspects of performance that are realized or become better known only during the deferral period. Longer Performance Periods. The time period covered by the bonus policy performance measures is extended (for example, from one year to two or more years). Longer performance periods and deferral of payment are related in that both methods allow awards or payments to be made after some or all risk outcomes are realized or better known. Reduced Sensitivity to Short-Term Performance. The bonus policy could reduce the rate at which the payout increases as short-term profits or other short-term performance measures increase, instead giving long-term measures more weight. This method reduces the influence of short-term incentives and allows for the sort of long-term, safety and soundness outlook the examiners seek. Board Discretion and Oversight. The board of directors could be given the authority and the discretion to modify at least part of each bonus based on their assessment of the employee’s performance. The board could also be required to review the design and function of the bonus plan on a regular basis.  The Guidance makes it clear that the “monitoring methods and processes used by a banking organization should be commensurate with the size and complexity of the organization, as well as its use of incentive compensation.” Therefore, while smaller institutions do not need incentive compensation programs as robust as larger organizations, even smaller institutions should probably incorporate some of the strategies outlined above.

Conference of State Bank Supervisors Urges Federal Regulators to Simplify Regulatory Capital Rules

Posted on January 5, 2018, Authored by Benjamin E. Streckert, Filed under Banking and Financial Matters

On September 27, 2017, the FDIC, the Federal Reserve, and the OCC (the “Agencies”) issued a proposed rule that simplifies the compliance requirements of the existing regulatory capital rules and is intended to reduce the regulatory burden imposed by it. Developed with small- and medium-sized banks in mind, the proposed rule would: replace the complex definition of high volatility commercial real estate exposures in the standardized approach capital framework with a more straightforward definition for higher-risk acquisition, development, or construction loans called high volatility acquisition, development, or construction; simplify the threshold deduction treatment for mortgage servicing assets, temporary difference deferred tax assets not realizable through carryback, and investments in the capital of unconsolidated financial institutions; and simplify the limitations on minority interest includable in regulatory capital. The Conference of State Bank Supervisors (the “CSBS”) recently submitted a comment letter on the proposed rule. The letter commends the Agencies’ desire to simplify the regulatory capital rules but argues that the proposed rule does not do enough. In the CSBS’s words, “[t]he staggering complexity of the current regulatory capital rules imposes an unsustainable burden on community banks” and “fail[s] to increase the risk-sensitivity of the capital rules for community banks.” Further, it argues that the “sheer complexity of the capital rules . . . may cause smaller . . . institutions to forego advantageous opportunities due to the uncertainty surrounding their treatment under the . . . capital rules.” Accordingly, the CSBS proposes that the Agencies develop a simplified capital framework for smaller, community banks that would streamline the methodology for calculating risk-weighted assets. The CSBS suggests eliminating or consolidating exposure categories and risk weights intended to capture activities in which “non-complex” financial institutions do not routinely engage. This would ease the burden of implementation costs related to establishing new systems and hiring and training personnel to navigate categories of assets or exposure that community banks rarely encounter. The CSBS also proposes other solutions to the growing regulatory burden that are particularly tailored to benefit community banks. Although the CSBS’s letter is only a comment to the Agencies’ proposed rule, it does show that regulatory concerns specific to community banks are being brought to the attention of the federal regulators.