Bonus time at First Marblehead …

Let’s set the stage: You’re the chief executive of a struggling student-loan company that hasn’t turned a profit for more than two years. Regulators raised questions about how lenders in your industry operated. The financial crisis put a dent in the whole loan securitization market at the core of your business model. Then the federal government revamped the entire student-lending landscape, making more loans directly to students and slashing subsidies for private lenders. The future looks uncertain at best.

Doesn’t that kind of rosy scenario calls for a $2 million cash bonus not tied to any concrete performance measures? Plus another $4 million in restricted stock, while we’re at it?

It does if you’re Daniel Meyers and the company is First Marblehead (FMD), to judge from the company’s proxy, filed late on Tuesday. Sure, it’s something a come-down from $16.2 million in total compensation last year, virtually all of which came in the form of stock options. But total pay of $6.2 million in the circumstances is nothing to whine about.

What’s all the more remarkable about First Marblehead’s largesse is this: The company’s market-cap is a titchy $243 million. That means that the $22.4 million Meyers has received over the past two years amounts to about 9.2% of the company’s market value — or about 8% of its stockholders’ equity, if you prefer. An investment in First Marblehead, meantime, would be down nearly 60% over the last three years, trailing the S&P 500 by 53% (and your mattress by a smidgen more).

It’s far from the first time First Marblehead has caught our attention. Last fall, we called them out for showering cash on the executives who were minding the shop while the company’s shares plunged from $30 to $3. Most recently, the company named a couple new directors (after doubling the annual board fee), and threw more money at another departing executive. Other appearances in these virtual pages include its lobbying drive amid a regulatory sweep in 2007, a sympathetic pay cut early the following year and the surprising fall-out from another company’s bankruptcy soon after.

The company has performed a little better in recent months, beating the indexes by a small margin over the last year or so. And the board had some glowing words for the co-founder’s performance, crediting him with “significantly improving the viability of the Company, as demonstrated by an increase in the Company’s cash, cash equivalents and short-term investments,” as well as with reducing expected taxes, “a reduction in compensation and benefits expense of over $54,500,000 from fiscal 2008 to fiscal 2009 and the entering into of two loan program agreements” likely to increase loan volume.

Still, we’re struck by how aspirational a lot of that is — wouldn’t it be better to see how some of those goals actually pan out?

Image source: First Marblehead website (and no, we’re not quite sure what it means either)


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