is taking steps to rein in some pricey pay packages for senior executives as part of an ongoing restructuring effort.
In a regulatory filing made Tuesday, the bank said the cost-cutting moves include ending a supplemental retirement plan and implementing new stock ownership guidelines, among other decisions. Canceling the supplemental plan alone will save $16 million a year for the next five years, the bank said.
The bank said the moves were designed to "better align executive and employee compensation with company performance and shareholder interests." Shareholders are being asked to approve a new management incentive plan under which a board committee determines what goals are to be achieved before awards are paid. First Union also said it intends to rely more heavily on stock options for long-term incentive compensation.
The latest moves will likely be seen as a further step in the right direction from CEO Ken Thompson, who took charge of the bank just about a year ago from Edward Crutchfield, the former bank head, whom many observers held responsible for problems including bad loans and shaky acquisitions. Analysts in general have praised Thompson for his more candid disclosures about performance and his willingness to admit the need to turn things around. The stock rose $1.64, or 5.3%, to $32.69 Tuesday.
The bank said due to a limitation under its existing stock plan, there weren't enough stock options to compensate Thompson for foregone benefits. Instead Thompson received a cash payment of $4 million in 2000, which he subsequently invested in an open-market purchase of First Union common stock. "I am interested in showing current and future shareholders of First Union how much I believe in this company," said Thompson in the filing.