Synovus Financial Corp.‘s (SNV) Chairman, President and Chief Executive Officer (CEO) Kessel D. Stelling’s total compensation had been raised 66% to $1.47 million in 2011, according to a regulatory filing on Friday. In 2010, Stelling’s compensation was $884,851.
Stelling’s pay package includes salary of $875,000 and stock awards of $437,000 for the year 2011. He has also received $47,722 in extra benefits.
After Stelling’s appointment as CEO in October 2010, Synovus recorded a considerably reduced net loss. In the prior year, it had witnessed a net loss of $848.2 million, which came down to $118.7 million in 2011. The improvement was marked by a significant decline in credit costs along with profits in third and fourth quarters of 2011.
In January 2011, Synovus also announced efficiency initiatives to align its operating cost structure with the current size of the organization. During 2011, Synovus completed these initiatives and exceeded 2011 targeted expense savings of $75 million.
For Synovus, credit quality enhanced significantly in 2011, attributable to continued improvement in credit quality trends. Provision for loan losses was reduced to $418.8 million from $1.1 billion in the prior year, improving 63%. Net charge-offs declined to $585.5 million, down 57.0% from $1.4 billion last year.
However, due to the economic slowdown, many of the senior banking executives had been facing pay cuts. Large U.S. banks such as Bank of America Corporation (BAC), Morgan Stanley (MS) and Goldman Sachs Group Inc. (GS) are trimming the compensations of their CEOs. However, the CEO of JPMorgan Chase & Co. (JPM) still has the benefit of a steady pay structure.
We believe Synovus is in a recovery phase, driven by lower non-performing assets and improving operating efficiencies, which should make the company more profitable in the upcoming quarters. Furthermore, the company’s planned expense saving initiative will act as a positive catalyst to it. However, repayment of funds generated through Troubled Asset Relief Program (TARP) is still not visible in the near term.
Synovus currently retains its Zacks #3 Rank, which translates to a short-term Hold rating.
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