Banking

Ally Financial CEO’s pay rose 70 percent in 2015

Jeff Brown, who was named Ally Financial CEO in 2015, made $7.5 million last year, counting salary, bonus and stock awards.
Jeff Brown, who was named Ally Financial CEO in 2015, made $7.5 million last year, counting salary, bonus and stock awards. tsumlin@charlotteobserver.com

Ally Financial’s Charlotte-based chief executive saw his pay rise 70 percent in 2015 after he was promoted to the top job at the Detroit-based auto lender.

Jeff Brown, who became CEO in February 2015, made $7.5 million last year, counting salary, bonus and stock awards, the company reported in a securities filing Wednesday. That was up from $4.4 million in 2014, when Brown was head of the company’s dealer financial services business.

The pay increase comes as Ally faces criticism from an activist hedge fund frustrated with the company’s share price, which is lagging the $25 at which it debuted in a 2014 initial public offering. This week, the lender said it will appoint a new independent director who will be selected in consultation with the fund, Lion Point Capital.

Ally’s shares fell about 21 percent in 2015 and are down more than 2 percent this year. In comparison, the Standard & Poor’s 500 index fell less than 1 percent last year and is down less than 1 percent this year.

The company also disclosed compensation for two other executives based in Charlotte, where Ally employs about 800 people.

Christopher Halmy, chief financial officer, made $3.1 million, up from $2.4 million. Diane Morais, who was promoted last year to head Ally’s online-bank subsidiary, made $3.1 million in 2015. Wednesday’s filing does not disclose her compensation from previous years.

The executives’ pay rose in part because of cash bonuses they are receiving for the first time since Ally exited the federal bank-bailout program in 2014. General Motors Acceptance Corp., the name Ally went by until 2010, accepted a bailout of $17.2 billion from the Troubled Asset Relief Program.

Ally said terms of TARP prevented it from awarding the bonuses, which were paid last month. Brown was awarded a bonus of $1.7 million for his performance last year. Halmy’s bonus was $736,539, and Morais’ was $757,692. Ally said Wednesday the cash bonuses are necessary for it to attract and retain competitive executive talent.

Wednesday’s filing also shows Ally made a $2.5 million contribution to an unnamed charity in exchange for consulting services provided by former CEO Michael Carpenter. Ally said Carpenter, who retired early last year, did not otherwise receive any pay or benefits in connection with his consulting services to Ally.

In boosting compensation for executives, Ally pointed to accomplishments the company made last year. In highlighting Brown’s performance, for example, the company noted that adjusted earnings per share grew by 19 percent to $2, and that retail deposit growth exceeded targets.

But Ally also remains under pressure to lift its share price, which closed at $18.16 Wednesday, down a little more than 1 percent.

That performance has disappointed some early investors in Ally, which has not paid a dividend on common shares since going public. Last year, the Federal Reserve gave Ally permission to buy back the last of preferred shares with terms restricting it from paying dividends. Ally would still need to seek separate Fed permission to initiate dividend payments on common shares.

Ally noted Wednesday steps it says it has taken to more closely align executive compensation practices with shareholders’ interests.

The company’s new compensation program involves awarding 50 percent or more of total direct compensation for top executives in the form of long-term incentive awards. The awards are composed of a mix of stock that executives will receive if certain performance targets are met, and stock that vests annually over a three-year period. Staff writer Rick Rothacker contributed

Deon Roberts: 704-358-5248, @DeonERoberts

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