A Tennessean analysis of pay packages from regulatory filings at the top banks by market share here shows that many banks are beefing up salaries and awarding stock to executives — shares that can be redeemed for cash within as little as a year.
Critics say too many bank executives are benefiting — perhaps even being rewarded — for past failures, even as taxpayers fund an unprecedented $700 billion federal bailout of the financial system.
The issue points to a thorny question in an age in which the line between partial government ownership and the for-profit world has blurred: How can bankers be rewarded fairly without being encouraged to take on too much risk and chase short-term profits?
RelatedPDF: A look at how much bankers will makeCincinnati-based Fifth Third Bank CEO Kevin Kabat saw his salary more than double to $2.1 million when the board of directors decided to pay him partly with stock valued at $1.15 million in 2009. His actual pay will fluctuate based on his bank's stock price between now and June 2011, when he is due to be paid in cash at whatever rate the stock is worth at that time.
"It is outrageous, particularly after this company had to be bailed out by taxpayers after spectacular losses," said Mark Brooks, Nashville-based senior national researcher for the Utilities Workers Union of America, part of a group of unions filing shareholder resolutions trying to limit bankers' pay, including at Fifth Third.
Fifth Third spokeswoman Debra DeCourcy said the bank made the changes to its CEO pay because of federal government rules outlawing cash bonuses for top executives at banks that got federal aid. Those rules also were in effect for 2008, but at the time the bank didn't give the CEO a raise. That year, the bank lost $2.1 billion. By 2009, it had made $737 million in profits.
Pay for performance?It was a different financial picture at the parent company of First Tennessee Bank.
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