Fifth Third Bancorp’s (FITB - Free Report) newly appointed Chief Executive Officer (CEO) Greg D. Carmichael received a whopping 65% hike in his total compensation package for 2015, compared to the prior year. His total annual pay increased to $6.45 million in 2015 from $3.91 million, according to a Securities and Exchange Commission filing on Thursday.
Succeeding the former CEO Kevin T. Kabat, Carmichael, took his position at Fifth Third on Nov 1, 2015.
The increase in Carmichael’s compensation was largely driven by the rise in his pay from stock awards which jumped to $3.75 million from $1.39 million in the prior year. Also, a 43% surge in non-equity incentive plan compensation to $1.33 million contributed to the rise in his 2015 pay. Though the base salary increased 13% from the prior year to $806,986, a significant rise was not awarded as he served as CEO for just 2 months in 2015.
Carmichael joined Fifth Third in 2003, as the head of information technology and in 2006 he was promoted to the chief operating officer. By 2009 his responsibilities broadened and included leading the retail bank, business banking, and all affiliate banks and markets. In 2012, Carmichael was named president.
Notably, Kabat, who served for 33 years at the Ohio based bank and a predecessor, will continue to act as executive vice chairman of the board until he retires in Apr 2016. Kabat received a 7% hike in his 2015 compensation to $7.98 million.
Fifth Third, with a diversified traditional banking platform remains well poised to benefit from a recovering economy along with its Midwest footprints. With solid capital levels, further acquisition activities can be expected. Also, the approval of its 2015 Capital Plan that includes share buyback up to $765 million and intention to increase quarterly dividend by 7.7% to 14 cents reflects the company’s commitment to enhance shareholders’ value. Last June, the company revealed its plan to consolidate or sell around 100 branches and around 30 other properties. The potential moves are expected to result in $60 million in cost savings annually.
However, challenges lie ahead for Carmichael. Fifth Third’s profitability continues to be limited with margin pressure and stringent regulations. While the new CEO of the bank looks pro active, it is difficult to state how much the bank will gain under his leadership or to what extent the bank’s performance will get a boost.
Currently, Fifth Third holds a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the finance space include GAMCO Investors, Inc. , Banc of California, Inc. (BANC - Free Report) and Piper Jaffray Companies , each sporting a Zacks Rank #1 (Strong Buy).
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