Bank Chairman Michael Rose fielded questions about pay in the face of the bank's third straight year of losses during the company's annual shareholders meeting at the Gaylord Opryland Resort & Convention Center in Nashville.
First Horizon lost $269.8 million last year. It increased compensation for executives by
$7.7 million more last year, mostly to Chief Executive Officer Bryan Jordan, who was promoted from chief financial officer in 2008, and to Frank Gusmus, who heads the profitable trading division for the bank, FTN Financial.
As part of its pay plan this year, the bank also decided to pay executives with millions in stock units that turn into cash in 2011, following new federal rules that forbid cash bonuses at banks that took federal aid under the Troubled Asset Relief Program, or TARP.RelatedPinnacle posts loss because of problem loansRegions sees 5th loss in six quarters
Rose defended the pay levels on Tuesday, saying most of the executives who will benefit are new to the bank and didn't formulate the bank's past losing strategy of making so many real estate loans outside Tennessee.
That strategy, which has since been abandoned, caused a lot of the bank's problems over the past three years.
First Horizon has spent the past two years selling its mortgage offices outside of Tennessee, laying off staff and investing instead in Tennessee bank operations.
"We looked for opportunities to cut costs and increase productivity and efficiency, taking steps to save up to $100 million (in 2009),'' CEO Jordan said. "We are reinvesting some of those savings in technological innovations to enhance customer experiences and build more efficient processes and practices over the long term."
Rose said most banks have suffered during the real estate crisis. "We haven't had anything comparable since the Great Depression,'' he said.
At Tuesday's meeting, things got testy between Rose and shareholder Bettye Jones, who said she had driven from Memphis.(2 of 2)
Streamlined First Tennessee narrows lossReal Estate Outlook: Faster Recovery?