MSCI pays big dough to new CFO…

May 31, 2012

Generally speaking, if you want to know how much a company values an employee, you follow the money. (There are some well-known exceptions, but we’ll leave that rabbit hole for another day.) However, if the general rule applies in the case of MSCI, Inc. (MSCI) — which, like Morningstar, (MORN) provides various tools and services in the investment space — then we can conclude that MSCI wanted to hire Robert Qutub pretty badly.

MSCI announced yesterday in an 8-K that Qutub will join the company as its new CFO in mid-July. He succeeds the current CFO, David M. Obstler, who agreed to hang around and help with the transition until August 31, 2012.

Qutub comes to MSCI after spending the past 8 years at Bank of America (BAC), where he most recently served as its CFO of Consumer and Business Banking. In his new job, he will start at the same salary that Obstler got, $500,000 per year, according to Qutub’s Offer Letter. Unless he resigns or is terminated for cause, though, MSCI has promised to pay Qutub a guaranteed bonus of $1.6 million. The form of the bonus will be determined later, but the company’s letter stated that it “may be paid partially in cash and partially in a long-term equity-based incentive award (including, without limitation, restricted stock units, stock options, or performance units).”

But $2.1 million wasn’t enough to seal the deal. There’s more:

“You will receive a one-time equity-based award of MSCI restricted stock units valued at $1,000,000 to compensate you for performance-based compensation you will be forfeiting at your current employer as a result of your resignation.”

Given Bank of America’s performance over the past 8 years, it’s hard to imagine a scenario where Qutub’s RSUs were worth anything close to what they once were, so the language about forfeiting something valuable seems like a bit of a stretch. Then again, because Qutub wasn’t one of BAC’s top executives, there’s no way to really know what was the price of those RSUs.

In addition, MSCI throws in another $325,000, which the company describes as a one-time cash “Sign-on Bonus”, and Qutub will start his job as a $3.425-million-dollar man (plus all the little stuff, such as health and welfare benefits, 6 weeks of vacation, and so forth).

Compensation at MSCI has been a touchy subject with some of its investors lately. According to an article in Reuters earlier this month, the British proxy firm Manifest gave MSCI a “D” for executive compensation because “the plan made it too easy for executives to win performance awards and lacked information about targets which could trigger additional pay.” While that type of criticism is often leveled by ISS — perhaps the best-known company in the U.S. that provides proxy advisory services — Reuters points out that MSCI owns ISS. Since ISS wanted to avoid a “potential conflict of interest,” the article states that ISS simply “sent clients research on MSCI’s proxy from Manifest.”

Investors’ angst is understandable from one perspective: MSCI’s Trailing Total Returns currently lag behind its competitors and the S&P 500 in both year-to-date and one-year returns. But if Qutub can help his new employer turn those numbers around, investors may not care so much what he or any of his colleagues are paid.

Image source: Counting beads with money, via Shutterstock

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