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Fears about spikes in tax rates could lead a number of capital-heavy bank to consider one-time plans to return capital to shareholders.
November 2 -
Pulaski Financial (PULB) in St. Louis has repurchased almost a quarter of the preferred stock it had issued to the Treasury Department under the Troubled Asset Relief Program and that was subsequently sold to private investors in an auction.
August 23
A small but growing number of community banks are increasing salaries and compensation for top executives in advance of this year's proxy season.
Glacier Bancorp (GBCI) in Kalispell, Mont., and F.N.B. Corp. (FNB) in Hermitage, Pa., recently disclosed that their boards had approved salary increases for their chief executives. Pulaski Financial (PULB) in St. Louis and Meta Financial (CASH) in Sioux Falls, S.D., disclosed that CEO compensation had increased in 2012 from a year earlier.
Executive pay could post a modest comeback
"You're seeing some bigger changes" in executive pay, says Susan O'Donnell, a managing director at consulting firm Pearl Meyer & Associates. "Incentives are starting to pick up as performance improves."
The $7.6 billion-asset Glacier increased the 2013 salary for Michael Blodnick, its president and chief executive, by 19% to nearly $471,000, according to a Dec. 24 regulatory filing.
"We had held salaries down for a number of years — or had no increases — and I had not taken a bonus since 2007," Blodnick says. "With things starting to turn [around] this last year, the board felt that it was time to look at restating some of those salaries and incentives."
Blodnick's salary was $334,183 in 2010 and 2011 before increasing to nearly $396,000 last year, regulatory filings show. In a March 2012 proxy filing, Glacier said that Blodnick's base salary was the lowest among the CEOs in a peer group of 20 banks.
"There are a whole host of issues" driving decisions on executive compensation, says Stephen Brown, a partner at the human resources consulting firm Mercer who advises banks.
"For some banks, it's been a tough couple of years and, in general, pay increases have been very modest," Brown says. "Some banks have frozen executive salaries, so this may be the first increase they have gotten in a couple of years."
Other factors could be leading banks' board and committees to consider pay raises this year. Some banks are finally able to increase pay after exiting Tarp, says Michael Melbinger, an employee benefits lawyer at Winston & Strawn.
The $12 billion-asset F.N.B. repaid its $32 million in Tarp funds last January. The company disclosed in a Dec. 26 regulatory filing that it had increased the 2013 salary for Vincent Delie, the company's president and chief executive, by 24% from a year earlier, to $650,000.
Delie became F.N.B.'s chief executive around the same time the company exited Tarp.
The pay increase was part of a "standard compensation schedule" that aligns Delie's base salary to the 25th percentile of F.N.B.'s peer group, says Kathy Hammons, a company spokeswoman. She says that F.N.B. also gave Delie a stock grant in recognition of the company's performance last year.
Pulaski, which
Compensation among banking companies could vary significantly in the new year compared with the period before the 2008 financial crisis, O'Donnell says.
"You might see some bigger changes here and there, but with some banks you might see decreases," she says.
Shareholders have also
Compensation consultants say that concerns about the fiscal cliff did not play a meaningful role in decisions about executive pay. Such compensation often includes restricted stock awards that are largely off limits to executives for an extended period of time.
"Certainly the fiscal cliff was out there, but there is a whole host of issues" driving the decisions on executive compensation, Brown says.
