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Continued: Schafer: Shareholder grumbling over TCF execs' pay is justified

  • Article by: LEE SCHAFER , Star Tribune
  • Last update: April 29, 2014 - 8:35 PM

In its talking points with shareholders, TCF said the 500,000-share grant made to longtime CEO William Cooper early this year was a “material inducement” to have Cooper stay as an employee through 2017.

More generally these “talking points” suggest that there’s plenty of long-term incentive baked into how it pays Cooper, not just bonuses for reaching short-term goals.

But on the merits, it’s far from clear TCF had a great case. The point that the proxy advisory firms made was that paying the maximum bonus of two times salary for officers is unusual, plus as ISS put it, the officers got those bonuses for meeting targets that “seem to lack rigor.”

Also, Cooper will get his entire 500,000-share grant if the company only beats half of its peers on a return-on-assets measure, and he can even leave the company during the term.

Both firms point out how little changed from last year, as once again Glass Lewis said TCF earned an “F” for its pay program.

As for the company’s effort to engage shareholders on the issue, ISS noted that the proxy statement said TCF’s executives did talk to the fund managers that controlled 85 percent of the stock owned by institutions. It just didn’t say whether they were ever asked about executive compensation.

Changing practices to win more support doesn’t have to mean wholesale changes to a philosophy of paying executives. For Life Time it was a tweak, not a redesign. It wouldn’t have been that hard for TCF to avoiding losing this vote.

TCF said it “takes the views of its shareholders seriously and we will meet with many of them following this most recent vote to identify any concerns and respond accordingly.”

So maybe by this time next year, TCF will win back some support. Its goal had better not be 51 percent.

 

lee.schafer@startribune.com • 612-673-4302

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