|Several shareholders pressed chief executive Jay Hooley about how the company’s top executives are paid.|
State Street pressed on pay, dividend
Jay Hooley, at his first shareholder meeting yesterday as State Street Corp.’s chief executive, pledged to reinstate a stock dividend as soon as regulators allow it, and to pay more attention to risk management.
“You’ll see more and more of that embedded in this company in 2010 and beyond,’’ Hooley said of risk oversight, calling it, “near and dear to my heart.’’
Hooley took over as chief of the Boston financial services giant March 1, following a volatile 18-month period during which the company struggled with investments that lost value in the financial crisis. During that time, the company also received and paid back $2 billion in government bailout money and faced legal actions brought by regulators, customers, and investors over the steep losses.
Hooley said 2010 will be a “transition year’’ for State Street, as the economy slowly improves, and projected operating earnings will “slightly’’ outpace last year’s $3.32 per share.
Several shareholders pressed him and his predecessor, company chairman Ronald Logue, about how the company’s top executives are paid. Tim Smith of Walden Asset Management, a social investment firm in Boston that owns State Street shares, warned that a “rush to bonuses as usual next year is unjust and unwise.’’
State Street executives took no bonuses or incentive pay in 2008, but Logue still earned compensation of $28 million. He received $7 million in incentive pay and restricted stock for 2009, his final year as chief executive, and a $6 million transition award for staying on as chairman until the end of this year.
Investors at yesterday’s meeting, held at State Street’s downtown headquarters, approved a measure proposed by management to adopt a policy giving stockholders the right to have an advisory vote on executive pay.
Still, some longtime shareholders said the company let investors down by cutting its quarterly dividend from 24 cents a share to a penny last year, after State Street was forced to take $2 billion in federal funds to remain stable. One investor, Michael Robbins of Brookline, urged Hooley to “do something about the wretched penny we get.’’ Another estimated he lost $107,000 in dividend payments, and charged that directors failed to properly oversee management.
Hooley, responding to investors’ comments, said that as soon as the Federal Reserve permits it, “I can assure you it’s a priority’’ to restore the dividend. State Street cut the dividend to preserve capital, but insists it now has a substantial financial cushion.
Investors voted down a shareholder proposal to permanently separate the chairman and chief executive posts — a move that became common at other companies after the fraud and excesses of the Enron era.
Logue said the jobs are now separate at State Street, with his move into the chairman’s role, and Hooley’s elevation to chief executive. Whether Hooley will take on the chairman’s job when Logue leaves the board in 2011, he said, will be decided this year.
State Street shares rose 2 cents yesterday, to close at $40.60.
Beth Healy can be reached at firstname.lastname@example.org.