E*Trade says to name outside director in settlement shareholder lawsuit
Thursday May 23, 9:51 PM EDT
MENLO PARK, Calif., May 23 (Reuters) E*Trade Group Inc (ET), the online brokerage and financial services company, on Thursday agreed to name a new independent director to its board and reshuffle a key oversight committee on executive pay as part of a settlement to a shareholder lawsuit.
The concession came on the eve of E*Trade's annual shareholder meeting, expected to focus in part on the lavish pay package for Chief Executive Christos Costakos.
E*Trade said it would add a new independent director to its nine-member board and change the membership on its compensation committee, with the new director acting as the chair. Another committee will review all of the board's oversight processes and make changes as needed, it said.
"The steps we have taken in recent weeks underscore our commitment to shareowners, stakeholders and associates that we will maintain the highest level of integrity with regard to issues of corporate guidance," Costakos said in a statement.
The company said those steps, along with a pay cut for Costakos, were part of a proposed settlement to a shareholder lawsuit filed in December 2001, pending court approval.
An E*Trade spokeswoman could not be immediately reached for comment.
E*Trade said the new independent director must have no prior board or employment affiliation to any of the current board members or the company's executive officers.......
E*Trade, in its proxy statement, says that except for Costakos all its directors are independent because they have no employment relationship with the company. Director William Porter is the founder and chairman emeritus of E*Trade.
Under pressure from investors, Costakos agreed earlier this month to give back $21 million of his 2001 compensation package. He was still paid nearly $60 million, far more than the chiefs of blue-chip brokerages such as Goldman Sachs Group (GS) and Merrill Lynch & Co.(MER)
E*Trade rewarded Costakos, against the backdrop of a tough downturn in the stock market that battered the results of brokerages.
Costakos, 53, owns nearly 5 percent of E*Trade and has been credited with broadening its operations from the slumping sector of online stock trading and toward the more stable areas of banking and other financial services.
As part of his revised package, Costakos signed a two-year contract with E*Trade that provides an annual bonus based on the company's performance, but no base salary.
E*Trade reported a first-quarter net loss of $276 million, including a one-time charge of $299 related to accounting for acquisitions. Excluding charges, it booked an operating profit of $27 million, up from $1 million a year earlier. |
