WASHINGTON — While banks are likely to object to proposed regulatory restrictions on executive pay, the plan unveiled Monday to discourage risky pay structures could have gone a lot farther.

The proposal would require institutions with more than $1 billion of assets with incentive pay structures to monitor pay agreements with senior executives and establish steps to regulators' liking to prevent incentive bonuses from leading to risky activity.

But while the measures, required by the Dodd-Frank Act, would move the U.S. closer to international pay rules, regulators appear willing to leave a great amount of discretion to boards of directors to decide how to adjust their pay policies. The only obvious prescriptions apply to those with more than $50 billion of assets, and even those boards have some flexibility.

"The Europeans are always probably going to be a little more proscriptive than we want to be on compensation," Federal Deposit Insurance Corp. Chairman Sheila Bair said in a briefing with reporters before her agency signed off on the proposal. "We're focused more on structures than dollar amounts. But it does bring us a lot closer."

The FDIC unveiled the proposal, which must be crafted with six other agencies, on the same day it finalized several changes to its deposit insurance assessment system.

Among the key changes are a new assessment base to capture a bank's nondeposit liabilities in its premium and reforms to how a large bank's risk affects its price. As a result of the changes, most healthy institutions beginning next quarter would pay between 5 and 9 basis points per assets minus Tier 1 capital.

The FDIC was the first to issue the executive pay proposal, which will give the industry 45 days to comment once it is published in the Federal Register. That period may not begin for several weeks as the other agencies consider technical changes. The other agencies are expected to sign off on the plan shortly.

"We hope that it would be done in the next few weeks," said John Bowman, an FDIC board director and the acting director of the Office of Thrift Supervision.

Under Dodd-Frank, the banking agencies must issue the pay rules with the Securities and Exchange Commission and the Federal Housing Finance Agency. The law requires banking companies to disclose their compensation agreements for top managers, and regulators to bar pay packages deemed excessive.

But the proposal leaves institutions themselves with much of the heavy lifting.

The proposal said compensation agreements for top executives "should balance risk and financial rewards in a manner that does not provide covered persons with incentives to take inappropriate risks that could lead to material" losses.

But the regulators only suggest ways to get there, such as adjusting an individual's bonus based on the amount of risk they are imposing on the institution, deferring a payment to ensure a risk has led to a financial gain for the bank or extending the performance period that would determine an executive's bonus.

"The agencies recognize that these methods for achieving balance are not exclusive, and additional methods or variations of these approaches may exist or be developed," the proposal said.

To be sure, the proposal would lead to significant reforms. The largest institutions would have to defer half of a senior executive's incentive-based pay for at least three years. The regulators also suggest stricter changes for the those companies. Those institutions would have to develop a way to identify which employees further down the ladder impose the largest risks to the organization, such as traders, and limit their pay structures accordingly.

Still, large banks would have discretion to identify those employees and come up with a way to make their incentive-based compensation more risk-sensitive.

Bair said while much of the onus would fall on banks themselves, the agencies would ensure they were following the spirit of the rule. Institutions, for example, would have to show that an earner's risky decision paid off in order to award that person a bonus at the end of the deferral. She said the deferral is better than a clawback, which may make it difficult for the institution to get a payment back if an employee's decision led to losses.

"The boards have to step up to the plate here. But with the deferral we do need and will be looking for meaningful monitoring of: What was the basis for the reward to begin with, and are those activities paying off or are they losing money?" Bair said. "Some of the clawback arrangements that are out there have been criticized. You really have to practically commit fraud to have a clawback. With the deferral, it makes it easier."

James Chessen, the chief economist for the American Bankers Association, said the proposal appears to strike a good balance.

"It is good to leave the discretion in the hands of the board because they're ultimately in charge of the risk-taking that the institution assumes," he said following the FDIC's public meeting. "That's the right kind of determination. When you get too proscriptive, unintended consequences result. You need some discretion on the part of the board to help make sure that they're getting the right people into place, but balancing the institution's long-term need for reasonable return."

But Bair said stricter rules were still possible. She noted that the proposal asks commenters whether regulators should adopt more proscriptive ways to identify who at a company should attract the most attention when it comes to their incentive-based compensation. The proposal would also stay clear of which types of instruments institutions could use to defer compensation, but Bair said comments could reveal information about that too.

"There are several areas where we will need to get comment that might make it more proscriptive" in the final rule, she said at the pre-briefing, adding later at the public meeting: "For instance, there is an alternative suggestion that we could just take the top 25 earners" that would be subjected to the rules.

Meanwhile, the board's premium measures mean a new world order for how banks are assessed for deposit insurance in coming quarters.

The agency essentially wrapped three significant proposals from late last year into one final rule. Perhaps the biggest reform, mandated by Dodd-Frank, allows the FDIC to calculate a bank's price by multiplying a risk-based insurance rate by its total assets, minus its Tier 1 capital. The new assessment base, basically equal to total liabilities, is meant to capture the many funding sources that do not factor in when using just domestic deposits as a base.

Another item makes significant changes to the formula the agency uses to determine a large bank's risk-based rate. The rule, which applies to institutions with over $10 billion of assets, adds factors more representative of a bank's long-term risk than in the current formula.

The rule was largely unchanged from the earlier proposals. However, it dropped a risk factor related to a bank's noncore funding, and exempted large banks with Camels ratings of 1 or 2 from an assessment penalty for holding large amounts of brokered deposits.

Martin Gruenberg, the FDIC's vice chairman, said the changes make the deposit insurance system, "more risk-sensitive, more stable and to a certain extent more equitable as well."

But Bowman and John Walsh, the acting comptroller of the currency, raised concerns that the changes may prove too complicated for institutions to adopt all at once.

"My only thought is that it would be important for the board to monitor … the new system," Walsh said.