Thursday, March 12, 2009

Bank Robbery

Big bucks for bankers and brokers at Regions.

Posted By on Thu, Mar 12, 2009 at 4:00 AM

Bankers and brokers at Memphis banks should be able to make ends meet for another year of the recession, thanks to compensation packages disclosed last week.

Birmingham-based Regions Financial, which got $3.5 billion in the U.S. Treasury bank bailout, was especially generous, even though its stock price has fallen from $35 in 2006 to $3.20 this week.

According to the proxy statement made public recently, Regions president and CEO C. Dowd Ritter received total compensation of $9,261,865 in 2008. In 2007, he earned $7,713,138. In 2006, he earned $18,433,987. His three-year haul: $35,408,990.

Ritter is eligible for retirement. For better or worse, he didn't. Had he retired at the end of 2008, his annual benefit would be $2,311,118, according to the proxy.

The highest-paid Regions employee for 2008 was Memphian Douglas Edwards, former CEO of Morgan Keegan, a profitable division of Regions since being acquired in 2000. Edwards left Regions in 2008. His total 2008 compensation, some of which was dictated by prior agreements with Morgan Keegan, was $10,085,834.

Over at Atlanta-based SunTrust Bank, CEO James M. Wells III earned a total compensation of $5,450,214 in 2008. His three-year haul: $15,026,578. SunTrust got $4.9 billion in the bailout. Its stock price has fallen from $84 in 2006 to $11 this week.

Memphis-based First Horizon National, parent of First Tennessee Bank, had not released its 2009 proxy at press time.

The full proxy statements — wordy but still the most bang for the buck in the whole realm of financial disclosure — can be viewed on the companies' websites. Compensation is approved by a committee of outside board members who are paid $80,000 to $100,000 a year for their wisdom and trouble.

Regions went on a buying spree 10 years ago, acquiring Morgan Keegan in 2000, Union Planters Bank in 2004, and AmSouth Bank in 2006. Someone thought bigger was better, and it was for a few top executives. Jackson Moore, former CEO of Union Planters, who retired at the end of 2007, earned $12,290,451 in 2007 and $29,190,349 in 2006. But now Regions is just a big butt-ugly bank trying to survive and get its stock price up above $5 a share.

The bailout — technically the American Reinvestment and Recovery Act of 2009 — is supposed to impose limits on executive compensation, so for banks it's a matter of getting it while the getting is good.

From the Regions proxy: "At this time, the compensation standards under ARRA have not yet been developed. However, we expect the standards will require a substantial alteration to our compensation program."

Or, as the bank robbers said in the old television westerns, "Hurry up and grab that cash, boys. The sheriff's comin'!"

Meanwhile, there's another heist planned for 2009.

This note from the Regions compensation committee:

"As a result of the reduction in 2008 annual bonuses and the operation of long-term plans, the compensation committee determined to award additional equity opportunities in 2009 to our senior management to provide them with the opportunity to benefit appropriately from our long-term performance."

What this means in plain English is that the top dogs are getting fresh stock options that, in contrast to the ones they earned previously, could actually be worth something in a year or two because the "strike price," or price at which the option can be exercised, will be around $4 or $5 instead of $30 or more. When a stock is priced at $3, it is worth 33 percent more if the price rises $1 to $4 per share. Such price moves are not uncommon when stock prices fall below $5 a share.

Bottom line: C. Dowd Ritter and the gang could be sitting pretty by the end of the year, while ordinary shareholders wait for Regions to climb back to $25 or $35 a share.

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