STRATEGIC PARTNERS
May 9, 2002
MENLO PARK, Calif. -- E*TRADE Group (NYSE: ET) announced an agreement with Chairman of the Board and Chief Executive Officer Christos M. Cotsakos for a two-year contract that includes zero base salary and an annual bonus based exclusively on company performance.
The agreement also amended a prior grant of restricted stock returns two million shares to the company and called for the return of $6 million previously contributed on his behalf to the Supplemental Executive Retirement Plan, as well as a reduction of severance pay in the event of a termination.
According to a news release, the newly negotiated contract is aimed at completely aligning chairman and CEO compensation with shareowner and stakeholder value.
"I want to dispel any doubt that my commitment to the success of this company is unwavering," said Cotsakos in the release. "I am eager to eliminate the distraction of the compensation discussion so that we can focus on the business of E*TRADE Financial."
E*Trade had upset many investors when it disclosed last week that Cotsakos had received about $80 million in 2001, even as the company lost money. Its shares have fallen about 18 percent, to $6.12, since the April 30 disclosure, according to a New York Times report.
Even after returning $6 million in cash and $15 million in stock, Cotsakos will have received $60 million last year.
As E*Trade's shares fell to less than $10 in 2001, down from a peak of almost $60 in 1999, the board gave him an $800,000 salary, a $4.1 million bonus, $29.3 million in stock, $9.9 million in retirement money, $15 million to forgive a company loan and $17.6 million to make up for the taxes he owed on the stock and forgiven loan. It also gave him 1.3 million new stock options.
Cotsakos told the Times that a contract he signed in 1996 determined most of his 2001 pay and that the forgiven loan and restricted stock had been one-time payments that should be considered a reward for his entire tenure.
Compared with many of his corporate peers, Cotsakos received relatively modest pay in 1999 and 2000. In each year, he received about $2 million in cash and no stock. In 2000, he received 2.5 million stock options, which give him the right to buy that many E*Trade shares at a fixed price in the future and profit if the stock rises.
Since joining the company in 1996, he has sold $30.4 million worth of E*Trade shares, but has spent far more buying shares, according to Thomson Financial. He owns 12.3 million shares, according to the company's most recent filing.
E*TRADE Financial is the owner of E*TRADE Access, which manages a network of some 11,000 ATMs, including the former Card Capture Services portfolio.
