In compliance with the pay restrictions imposed on the company for participating in the Troubled Asset Relief Program (TARP), SunTrust Banks Inc. (STI) said in a regulatory filing on Wednesday that it has put in effect a salary freeze for all of its senior executives except one.
Atlanta-based SunTrust received federal assistance worth $3.5 billion as part of its participation in TARP during the height of the financial crisis. As a result, like other bailed-out firms, SunTrust’s executive pay faces restrictions imposed by the government. The salary freeze decision was approved by SunTrust directors to comply with the TARP Standards for Compensation and Corporate Governance.
The government now decides compensation-packages for the highest-paid employees at all the firms that have received bailout money and have not repaid yet. The primary intention of the government is to enable the bailed-out firms to repay government money by controlling excessive pay among others.
According to the filing, only bank President William H. Rogers Jr. was excluded from the salary freeze and he had received a raise in base pay related to his increased responsibilities. William is a potential successor to current Chief Executive James Wells.
According to SunTrust, top officers will neither receive cash bonuses for 2009 nor long-term restricted stock bonuses. However, the executives will receive portions of a predetermined amount of shares, distributed during the bank’s regular pay periods. The shares will then vest in two slices, partly in 2011 and the remainder in 2012. The shares will convert to cash upon vesting.
According to SunTrust, the compensation committee would review long term incentives at a future date to compensate for the salary freeze.
On Wednesday, the shares of SunTrust closed at $21.30 on the New York Stock Exchange, up 2.8% from the previous day’s closing price.
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