Although Congress imposed certain compensation restrictions on financial institutions that got government aid through the Troubled Asset Relief Program, it left other options available to reward top executives for their service. A case in point is Lincoln National Corp., which took advantage of one such exception by awarding generous grants of long-term restricted stock to its key leaders.
Lincoln National's participation in TARP's Capital Purchase Program came later than most other financial institutions. In mid-November of 2008, it asked the Office of Thrift Supervision for permission to become a savings and loan holding company. At the same time, it also filed an application with the Treasury Department for hundreds of millions in government capital.
The Radnor, Pa-based company, which markets itself under the name "Lincoln Financial Group," took $950 million in TARP money on July 10, in exchange for preferred shares and warrants. It paid the government a bit more than $4.6 million in dividends on those shares on Aug. 17th.
Lincoln National's executives got their long-term stock awards during the past few weeks, but all relate to an 8-K that the company filed with the Securities and Exchange Commission on Nov. 6. The filing states that the compensation committee of its board of directors' met on Nov. 2 and 4 to consider modifications to the compensation packages of four "Named Executive Officers" (abbreviated in the filing as "NEOs"). It continues:
"In arriving at these revisions to the compensation of our NEOs, the Compensation Committee reviewed market data provided by a third party compensation consultant for executives in equivalent positions who work in similarly sized diversified insurance companies. The Committee also considered the compensation structures utilized by other CPP participants for their executive officers. Based on this review, the Committee approved modifications to reduce the overall annual target compensation of these NEOs. The CEO's total targeted annual compensation for 2009 was decreased by approximately 21% as compared to his total targeted annual compensation for 2008. The Committee also altered their mix of compensation elements as compared to their compensation disclosed in the Annual Proxy to ensure compliance with the CPP compensation restrictions and prohibitions."The filing discloses the cash component, the "CPP-compliant shares" (called "salary shares"), and the "CPP-compliant long-term restricted stock units" ("RSUs) in three long, densely worded paragraphs. We've rearranged the information to make it easier to see what each NEO is getting.
Frederick J. Crawford, senior vice president and chief financial officer, will receive $637,500 in cash-based salary, $920,000 in annualized salary shares, and a grant of 30,700 RSU shares. (In 2008, Crawford's salary was $509,769.)
Robert W. Dineen, president of Lincoln Financial Advisors, will get $525,000 in cash-based salary, approximately $1.12 million in annualized salary shares, and a grant of a grant of 24,568 RSU shares. (Dineen's salary in 2008 was $419,754.)
Mark E. Konen, president of Insurance and Retirement Solutions, will receive $646,875 in salary, approximately $1.04 million in annualized salary shares, and a grant of 32,985 RSU shares. (Compare this to the $499,327 in salary Konen earned in 2008.)
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