- First Republic’s eight executive officers are giving up their 2023 bonuses “in light of the recent volatility in the banking system and its subsequent impact” on the bank, the San Francisco-based lender said in a filing Wednesday.
- The executives also forfeited vesting of their performance-based incentives for 2023.
- The bank’s executive chairman, James Herbert, chose to waive his salary effective March 12, according to the filing.
The compensation move is meant “to foster closer alignment with the shareholder experience,” First Republic said Wednesday.
First Republic’s board suspended its common stock dividend to focus “on reducing its borrowings and evaluating the composition and size of its balance sheet,” the bank said March 16. That was also the day 11 banks collectively deposited $30 billion in First Republic to shelter it from potential failure. The bank has lost more than 88% of its market value this year, according to Bloomberg.
Shareholders also may have lost confidence in First Republic after The Wall Street Journal last week published a story indicating several of the bank’s executives sold a combined $12 million in the company’s stock in the two months ahead of last week’s crisis. That total includes $4.5 million from Herbert and a collective $7 million from CEO Michael Roffler, Chief Credit Officer David Lichtman and private-wealth chief Robert Thornton, according to the Journal.
"Trust and confidence are so key in banking, and First Republic, if they haven't lost it, they certainly had it very much shaken both from investors and depositors, and that could be very hard for them to get back any time soon," David Smith, an analyst at Autonomous Research, told American Banker.
It is unknown the exact amount the executives are giving up in compensation. First Republic has yet to publish its pay information for 2022. Herbert’s salary was $900,000 for 2021, when he was serving not as executive chairman but as CEO. Herbert received a $9.2 million bonus in 2021, American Banker reported. Roffler, who was the bank’s CFO at the time, received $2.175 million.
Roffler became CEO last year after First Republic’s previous succession plan imploded.