We are getting ready to pay the President and VP their annual bonus which has a 10% compensation cap on it due to them being mortgage loan originators as well. As far as “compensation” is all of the following considered compensation:

Salary
Bonus or projected bonus?
401k employer contribution
Board of director monthly pay
Qrtly Dividends
Cell Phone Allowance
Car Allowance

a few more items

the 10% compensation rule doesn't apply if the 2016 bonus is pre-determined(budgeted item) at the beginning of 2016 because it isn't passed on the profits of loans?

Check out the CFPBs Compliance guide for the LO Compensation rule section 8.7.2. There are some nuances to it but you use W2 wages and tips and 1099 Misc income and any other awards or prizes to determine a loan originators total compensation.

Can LO get paid salary or do they need to be on an hourly wage?? Thanks

That all depends on whether they are an exempt employee.

Whoever makes that decision in your bank should read this:

https://www.dol.gov/Whd/opinion/adminIntrprtn/FLSA/2010/FLSAAI2010_1.htm

Thank you for the reading material and I will pass it on. I do know that this is going to be discussed at our next MLO meeting this spring. As the entire loan originators/officers are expected to be networking and selling loans, but it is nearly impossible to keep track of ones hours. And overtime is discouraged. More than a year ago all Mortgage Loan Officers were moved to hourly wages with the exception of managers. I am just trying to make sense of it all and understand what regulations apply.
Happy New Year!