The NCUA proposed rule on executive compensation is unclear and raises serious questions about its scope, NASCUS said.

"We believe there is a role for regulators in ensuring such compensation plans are consistent with principles of safety and soundness," Brian Knight, NASCUS's executive vice president and general counsel said in a letter to the agency. "However, regulatory authority related to compensation in the marketplace should be exercised judiciously."

All financial regulators were required to issue compensation rules under the Dodd-Frank Act , which was mandated by Dodd-Frank, all financial regulators were required to issue, prohibits incentive-based compensation arrangements that would encourage inappropriate risks by providing excessive compensation or that could lead to material financial loss. Affected institutions will be required to annually create and retain records documenting the structure of incentive-based compensation arrangements for seven years. Further, the proposal requires board members to provide direct oversight of compensation, including approval of all senior executive compensation plans and any material adjustments.