The CEO of E-Trade Financial Corp. received about $3 million in total compensation in 2010, after joining the financial services company in April of last year to lead its campaign to recover from credit losses linked to bad loans during the financial crisis.
Steven Freiberg came to E-Trade after 30 years at Citigroup, most recently as co-CEO of the bank's global consumer group.
At New York-based E-Trade, Freiberg replaced an interim CEO, Robert Druskin, who served in that role after Donald Layton's departure at the end of 2009 following nearly two years in the top job.
Druskin has been serving as board chairman, but E-Trade on Thursday announced Druskin's scheduled departure and named Freiberg interim chairman. E-Trade's board is searching for a new independent director, then will appoint a non-executive chairman.
Druskin agreed to be paid a base monthly salary of $300,000 as interim CEO, and received total compensation of $900,000 for his three months in that role last year, according to a recent Securities and Exchange Commission filing.
Freiberg's total compensation last year was $3,030,231, down 25 percent from the $4,045,936 that Layton received in 2009, according to Associated Press calculations.
The bulk of Freiberg's 2010 compensation came from a cash bonus of $2.25 million, an amount that was pro-rated to reflect his nine months as CEO last year, the SEC filing says. His employment agreement makes him eligible for a $3 million annual performance-based cash bonus target.
For last year only, Freiberg, 54, was guaranteed a pro-rated payment of the full target bonus level, the filing said.
E-Trade's compensation committee believed that was appropriate "because he was hired after performance goals for 2010 were established and after the performance period started," the filing said.
Freiberg received a base salary of $ 738,462, a pro-rated amount based on an annual salary of $1 million. He received $41,769 in other compensation, and got no stock or option awards last year.
However, for his nine months as CEO in 2010, he was guaranteed a pro-rated $2.25 million in incentive-based stock compensation, based on the estimated value of stock and options at the time they were granted, the filing said. While that covered work performed last year, the award was made in February of this year, under a program that the compensation committee established in early 2010, the filing said.
E-Trade's filing said the company considers the award to be part of its 2010 compensation. However, because the award was made in the current year, it wasn't included in the 2010 compensation table in E-Trade's filing, as required under SEC rules, the company said.
E-Trade last year reported a loss of $28 million. That was much smaller than the $1.3 billion loss in 2009, when E-Trade struggled to recover from the credit crisis and recession.
The company's core online brokerage business was hurt by a nearly 16 decline in trading volume last year, consistent with industrywide decreases.
E-Trade also offers banking services and mortgages, areas that were hit hard in the recession by investment losses and a spike in soured loans, leading the company to shrink the size of its loan portfolio.
Last year, revenue slipped to $2.1 billion in 2010 from $2.2 billion in 2009.
The AP compensation formula calculates an executive's total during the last fiscal year by adding salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the SEC.
The value that a company assigned to an executive's stock and option awards for 2010 was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company's stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.