Ally boosts cash salary for CEO to $1 million
Washington — Ally Financial’s new CEO will get a $1 million cash salary — after his predecessor didn’t get any cash under Treasury Department oversight — as the bank holding company announced new compensation programs for senior executives.
The Detroit-based auto lender and bank holding company’s pay for its top 25 executives required government approval until late December when the Treasury sold its remaining stake in the company ending the government’s involvement as part of the $17.2 billion bailout. Those pay restrictions applied to companies that received extraordinary bailouts under the Troubled Asset Relief Program.
On Friday, Ally announced new cash incentive programs for senior executives and a new long-term stock incentive program. The company will annually fund a a new cash incentive pool based on Ally’s financial performance. Of that, 25 percent will be deferred and paid over three years.
Ally said its new CEO Jeffrey Brown will get a cash salary of $1 million, CFO Christopher Halmy will get a $600,000 cash salary and group vice president and general counsel William Solomon $500,000. In 2013, only two executives got between $500,000 and $600,000 in cash salary. Ally hasn’t disclosed Brown’s total compensation yet.
Brown, who previously was president and CEO of Ally’s Dealer Financial Services unit, made $4.4 million last year — including $600,000 in cash. Ally said in its proxy filing that its target pay mix for its CEO will be 40 percent cash, including both base salary and annual bonus, and 60 percent in stock. The target for other executives will be 50 percent cash and 50 percent stock.
Ally said with its exit from the TARP program it will “implement a more customary executive compensation program beginning in 2015, which will emphasize incentive-based remuneration opportunities tied to sustainable performance results.”
Then Ally CEO Michael Carpenter received $9.5 million annually in all stock compensation and no cash; his compensation had remained unchanged since 2010.
Ally said starting this week it is discontinuing the practice of awarding vested deferred stock units as a component of executive officer base compensation.
The board approved special one-time compensation awards called during “this critical period as Ally transitions out of TARP and into its new compensation program” called “Ally LEADer Equity Participation awards” that vest in 25 percent increments annually; it will take four years for the awards to completely vest.
Jeffrey Brown was awarded 236,407 shares currently worth about $5.1 million, while Halmy was awarded shares worth $2.3 million.
Ally stock on Friday was up 0.6 percent, or $0.12, to $21.46 — still far below its $25 IPO price last year.
Separately, Ally said Barbara Yastine, the president and CEO of its online bank, Ally Bank, will step down June 19.
Last year, the U.S. Treasury said overall cash compensation for the top 25 Ally executives fell $3.8 million for the top 25 executives, down 25.2 percent, but the 18 Ally executives who remained in the top 25 over the previous year got a slight raise of 0.27 percent in overall compensation but no change in cash compensation. The new executives to the top 25 saw cash compensation fall 58 percent compared with other executives a year earlier.
Treasury said cash compensation for the top 25 executives at Ally Financial was on average 4 percent below the median for cash salaries and 62 percent below the median for total cash compensation for similar positions at similar companies. Ally said 83 percent of the top 25 Ally Financial pay packages approved consists of stock compensation.
Last month, Brown said it could return to offering home mortgages or credit cards again. He also said the company plans to expand auto lending to more customers with less-than-perfect credit.
Brown said in a Detroit News interview in February that he expects to decide in the next 30 to 60 days whether Ally will move its headquarters to the Detroit suburbs.
The company confirmed in January it was considering consolidating its five locations in Metro Detroit to a single location. Ally has about 700 people working in Detroit, along with 300 at the Southfield Town Center and Galleria in addition to employees in Troy and Auburn Hills. Ideally, Ally would be in one space, Brown said.
Ally’s annual meeting will be May 28 in Detroit. Cerberus Capital Management LP remains Ally’s largest shareholder, with an 8.6 percent stake, or 41.5 million shares. Its founder, Stephen Feinberg, is a director at Ally.