On TARP and bankers’ shared sacrifice…
It’s no secret that banks that are receiving money from the Treasury under TARP have had to agree to limitations on pay for top executives. But it wasn’t entirely clear how the various banks would handle this. And then we spotted this 8K filed by Bank of New York Mellon (BK) late yesterday.
In this agreement attached to the exhibit, which the 8K says applies to executives Robert P. Kelly, Gerald L. Hassell, Thomas P. Gibbons, Steven G. Elliott and Ronald P. O’Hanley, the company’s board writes that it “appreciates the concessions you are making…during these financially turbulent times.” The short letter — dated last Friday — goes on to identify several different pay-related items that the executives agree to, including the end of so-called golden parachutes, a clawback provision, and amends previously existing employment contracts.
What stands out about the Bank of New York Mellon letter is that others on the receiving end of TARP don’t seem to have put out similar letters. For example, this 8K filed by Merrill Lynch (MER) yesterday just notes the restrictions, but doesn’t include an agreement. Nor does Wells Fargo (WFC) which also filed a TARP-related 8K yesterday.
Of course, given what the WSJ has to say here about banks and other financial companies receiving help from Treasury owing over $40 billion in deferred compensation and pensions, it’s pretty clear that the new rules barely scratch the surface.
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Posted in Tags: 8Ks, TARP |
 1 Comment » |
November 3rd, 2008 at 7:50 pm
I thought some of the most interesting text in The Bank of New York Mellon Corp’s 8K was the following provision:
“In addition, the Company is required to review its Benefit Plans to ensure that they do not encourage senior executive officers to take unnecessary and excessive risks that threaten the value of the Company. To the extent any such review requires revisions to any Benefit Plan with respect to you, you and the Company agree to negotiate such changes promptly and in good faith.”
On a related note, Capital Corp of the West (CCOW) received help from the San Francisco Federal Reserve Bank in July 2008, prior to the current bailout package. They disclose in an 8-K filed 10/30/2008 that the Reserve Bank and the FDIC approved the employment agreement of their new CEO. This is the first example I have seen where the government had to approve a compensation package:
“On October 28, 2008, Capital Corp of the West (the “Company”) announced that the Federal Reserve Bank of San Francisco and the Federal Deposit Insurance Corporation have approved the employment agreement and compensation terms for Richard S. Cupp in his capacity as president and chief executive officer of the Company and its subsidiary County Bank.”
Link to CCOW’s 8K: http://sec.gov/Archives/edgar/data/1004740/000095013408018758/f50309e8vk.htm
Brennan Browne
Equilar, Inc.
http://www.equilar.com/