Even when things are tough, they always seem to come up smelling of roses.
As the Standard & Poor’s 500 Index got off to its worst-ever start to a year, there was a silver lining for the leaders of the biggest U.S. banks.
Bloomberg News reports that every January and February, the titans of American finance find out how much they’re getting paid. And every year, bank boards settle on a fixed dollar figure for executive stock awards. To determine how many shares that is, each bank tracks its stock price for a period of time - anywhere from one day to 10 - and divides the fixed dollar value by an average price. Higher stock prices yield fewer shares. Lower prices mean more.
Citigroup, for example, granted shares to CEO Mike Corbat on February 16 as part of his compensation for 2015. The bank’s board had decided to award Corbat stock worth $9m. Citigroup tracked its closing price on each day during the second week of February to derive the number of shares - the same method it used during each of the past three years. This year, that also happened to be when Citigroup shares bottomed out.
Citigroup’s average closing stock price for that period was $37.05, compared with $52.29 in the week before December 31. That means Corbat received about 70,000 more shares than he would have if Citigroup tracked and granted the award before the slump.
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