E*Trade exec to give $16 million windfall in bid to stop critics
By Deborah Lohse
Mercury News
Still trying to mend fences with investors outraged by his rich compensation deal, E*Trade Group's chief executive said Friday that he will give E*Trade's employees about $16 million of his 2001 pay package originally valued at roughly $80 million.
Details aren't final on how E*Trade's nearly 3,500 employees will share the windfall, executives said. But it's likely that virtually all employees will get roughly $1,000 apiece in cash as their share of the retirement proceeds.
The decision, announced publicly at the Menlo Park company's annual shareholder meeting in Redwood City, brings to $37 million the amount Christos Cotsakos has agreed to give back from his controversial pay package.
Two weeks ago Cotsakos, who is also chairman of E*Trade, an online financial services company, agreed to return $6 million in retirement pay and about $15 million in restricted stock to the company. He said he was responding to investor ``backdraft'' over a package many considered extravagant, especially given E*Trade's mediocre stock performance in 2001.
``We have heard you,'' Cotsakos said Friday to an occasionally grumbling audience of just more than 100, including investors and E*Trade employees.
Several investors who spoke at the meeting were in no mood to congratulate Cotsakos on his about-face. One investor, complaining about the stagnant stock price and Cotsakos' pay, got a smattering of applause when he suggested that ``the CEO and the board should resign and get a new group.'' Another recited each of the last four years of earnings -- ranging from 11 cents a share to negative 73 cents a share -- then pointedly asked, ``How much was your compensation, Mr. Cotsakos?''
Cotsakos also will place about 2 million shares of restricted stock, valued at about $12 million, into a pool to be doled out to high performers. Restricted shares are free to the recipient but can only be sold over a set period, in this case five years.
In a brief session with reporters, Cotsakos said he was ``disappointed'' and ``hurt'' by the investor outcry, saying that the pay package was part of a multiyear plan and that many components wouldn't have been paid out for years. But he acknowledged several times that ``times have changed'' and emphasized that he now believes his compensation is aligned with the interests of investors.
During the meeting, Cotsakos also addressed criticisms by corporate-practice experts that E*Trade's board is not really independent of management because too many members have business ties to E*Trade. Thursday, E*Trade announced some board changes designed to bolster the board's independence.
``It's very difficult in today's environment to find very talented, unaffiliated directors,'' said Cotsakos. |
