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
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
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
State Street shares rose 2
cents yesterday, to close at $40.60.
Beth Healy can be
reached at email@example.com.
Copyright 2010 Globe Newspaper Company.