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E*TRADE Financial Corporation’s ( ETFC - Analyst Report ) Chief Executive Officer (CEO) Mr. Steven Freiberg’s total compensation, including a cash bonus, had been raised to $6.3 million in 2011, according to a regulatory filing on Friday. In 2010, Freiberg’s compensation was $3 million.
Freiberg’s pay package includes salary of $1.0 million, a cash bonus of $3.0 million and stock awards of $1.5 million for the year 2011. He has also received $742,497 in options and $44,392 in other compensation. Furthermore, the CEO was granted $3 million worth shares, which will be vested over a period of 4 years.
After Freiberg’s appointment as CEO in April 2010, E*TRADE entered the profit region in 2011 for the first time since 2006. The company reported net income of $156.7 million or 54 cents per share in 2011, up from net loss of $28.5 million or 13 cents per share in the prior year.
Since the U.S. housing market troubles, E*TRADE was been under pressure as billions of losses were recorded on the risky loans in mortgage portfolio of its banking unit. As a result, E*TRADE has been working on its mortgage related issues and has reduced legacy loan portfolio to $13.2 billion in 2011 from $32.0 billion in 2007.
The competitive position of brokerage businesses in the current market depends on trading customers, predominantly active traders. As the long-term investing customer group is less developed, compared with the trading customers, there is an opportunity for future growth as and when the long-term customers expand.
Development of innovative online trading and long-term investing products and services, delivery of advanced customer service, creative and cost-effective marketing and sales as well as expense discipline can be considered as the key factors in executing E*TRADE’s strategy to profitably grow its trading and investing business.
After Freiberg’s appointment as CEO in 2010, E*TRADE’s brokerage business has remained strong with daily average revenue trades (DARTs) totaling 157,000 in 2011, up 4% from 151,000 in the year-ago period, amidst market volatility.
Due to the economic slowdown, many of the senior banking executives had been facing a pay slash. Large U.S. banks such as Bank of America Corporation ( BAC - Analyst Report ) , Morgan Stanley ( MS - Analyst Report ) and Goldman Sachs Group Inc. ( GS - Analyst Report ) are trimming the compensations of their CEOs. However, the CEO of JPMorgan Chase & Co. ( JPM - Analyst Report ) still has the benefit of a steady pay structure.
E*TRADE currently retains its Zacks #3 Rank, which translates to a short-term ‘Hold’ rating. Considering the fundamentals, we are also maintaining a long-term “Neutral” recommendation on the stock.
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