Daily News: April 8, 2013

CIT’s Thain Achieves Highest Scores for Liability Management

According to a CIT proxy statement, chief executive officer John A. Thain’s 2012 compensation totaled $8.25 million, which included a $5.75 million short-term incentive award and a long-term incentive award of $1.5 million. Thain’s annual base salary in 2012 was $1 million.

The following was excerpted from the regulatory filing on the 2012 performance assessment of Thain by CIT’s compensation committee, which shows “Significantly Exceeds” rating for liability management:

Category: Financial/Credit Objectives (20%)

  • “Significantly outperformed” two out of five pre-established goals, i.e., pre-FSA pretax income (considered the most important goal in this category) and classified loan percentage.

  • Maintained strong Tier 1 capital ratio; met the company’s expense target, and slightly underperformed on funded new business volume, which was “nonetheless 23% higher than in 2011.”

    Rating: “Exceeds Expectation,” resulting in 1.5X multiplier

    Category: Strategic/Business Development (20%)

  • Underperformed in three of four pre-established goals (grow equipment finance, grow Latin America, grow Asia) — “year/year growth improved over 2011, but still trailed targets.”

  • Commercial real estate business successfully expanded during 2012

    Rating: “Partially Meets,” resulting in a 0.5X multiplier

    Category: Risk Regulatory/Governance (30%)

  • Did not fully accomplish two of five pre-established goals, i.e., lift written agreement*, move trade finance into bank — lifting of the written agreement was considered the most critical objective in this category.

    *CIT is awaiting news on whether the Federal Reserve Bank of New York will lift a written credit agreement under which CIT has been operating since 2009 that order the company to improve risk-management programs which has prevented it from buying back stock or paying a dividend without prior approval.

  • Successfully accomplished three of the remaining five pre-established goals — strengthen compliance program in CIT bank, reduce number of overdue audit items, provide transparency to the board.

    Rating: “Partially Meets,” resulting in a 0.5X multiplier

    Category: Liability Management (30%)

  • All three pre-established goals (repay series A debt, debt rating upgrade and increase funding in CIT bank) were successfully completed with the repayment of series A debt (ahead of schedule)and ratings upgrades from three rating agencies)considered the most important in this category.

    Rating: “Significantly Exceeds,” resulting in a 2.0X multiplier