PNC Financial Services under investor investigation over alleged excessive payouts

July 26, 2010 - PRLog -- After a report concerning questionable executive compensation payouts an investigation on behalf of current long term investors in PNC Financial Services  over potential breaches of fiduciary duty related to the historical and potential compensation that was awarded certain senior officers and executives of PNC Financial Services was announced.

If you are a current long term investor in PNC Financial Services  stock, including those who purchased their PNC shares prior to 2007 and continue to currently hold their PNC shares, you have certain options and you should contact the Shareholders Foundation, Inc by email mail@shareholdersfoundation.com or call +1(858) 779 – 1554.

Kenneth R. Feinberg, the Obama administration’s special master for executive compensation, reviewed over the past five months compensations paid to the 25 highest earners of 419 banks between October 2008, when the first US Troubled Asset Relief Program funds were dispensed, and February 2009, when the stimulus bill took effect. Kenneth Feinberg said he immediately excluded most of the 419 companies from his examination because they said they didn't pay any executives more than $500,000, but he wound up citing 17 banks for making troublesome payments. 11 of the 17 banks making troublesome payments have already repaid the government for money they borrowed under TARP.

Mr. Feinberg determined that banks paid out $1.6 billion in unwarranted bonuses, retention awards, stock grants and "golden parachute" retirement packages to their top earners at the height of the financial crisis.

The PNC Financial Services Group, Inc. (PNC), a diversified financial service company located in Pittsburgh, PA, is among the 17 companies. Another of the other 16 companies was Citigroup, which was reportedly identified for having the most egregious compensation packages, according to government officials with knowledge of Mr. Feinberg’s report. Citigroup reportedly handed out several hundred million dollars in pay in 2008 as it neared collapse.
Nearly two-thirds of the payouts amount to Andrew J. Hall, owner of a nearly 1000 year old German Medieval Castle, who reportedly received a payout of more than $100 million in connection with spin-off of Citigroup’s Phibro energy trading unit for $370 million to Occidental Petroleum in 2009.

In most cases the banks told Feinberg that they were obligated by employment contracts to pay the bonuses and other compensation, but Kenneth R. Feinberg said to reporters that those 17 companies exercised "poor judgment" for making the $1.6 billion in "ill-advised payments" to their top paid employees shortly after accepting TARP funds from the federal government. "They shouldn't have made these payments,'" Feinberg told reporters. "They were ill-advised. They were troublesome."

According to the investigation by a law firm the investigation on behalf of current long term investors in PNC Financial Services  stock focuses, among other things, on possible shareholder claims that certain of PNC Financial’s senior officers were unjustly enriched through their receipt of unwarranted, excessive or unearned compensation in past years. Certain senior officers and executives at PNC Financial Services were awarded salaries, bonuses, stock options and other forms of long-term, ‘incentive’ or retirement compensation that were, so the investigation, excessive or unwarranted based on PNC Financial Services performance.  

While CEO of PNC Financial Services Group in 2008, James E. Rohr earned a total compensation of $8,549,098 or a 5year total compensation of $69.46million. In the same year PNC Financial Services Group Inc received $7.7 billion TARP funds. In 2009 James E. Rohr, without receiving a bonus, made $18 million, including $2.75 million in salary, and stock and options worth $11.8 million. In 2010 PNC Financial Services Group repaid the U.S. Treasury $7.6 billion in government aid.

The investigation by the law firm focuses on claims that the prior compensation awarded at PNC Financial Services (PNC) is now clearly improper based upon its current operating condition.

PNC Financial Services reported in 2007 a Net Income of $1.363billion, which decreased to $764million Net Income in 2008. Shares of PNC Financial Services (PNC) traded in 2008 at $81.21 per share and fell in 2009 to $18.51 per share. PNC shares recovered from its low in 2009 to recently $61.08 per share, but are still significantly lower than 2008.

Finally and most importantly the investigation focuses also on possible claims that would allow PNC Financial Services (Public, NYSE-PNC) stockholders to influence or control future compensation decisions at PNC Financial Services.

Within the industry huge amounts have been allocated for payout and bonus. Goldman Sachs is reportedly paying out an average of $544,000 per worker, though many could earn several times that amount, JP Morgan Chase’ on average pays about $400,000, and Morgan Stanley pays about $262,000. Morgan Stanley reportedly put aside $8.3 billion for pay and benefits during the first half of 2010, 44% more than during the same period last year. Goldman Sachs put aside $3.8 billion for pay and benefits in the second quarter — equivalent to 43% of total quarterly revenue — in addition to $5.5 billion in the first three months.

Those who are current long term investors in PNC Financial Services (Public, NYSE-PNC) stock, including those who purchased their PNC shares prior to 2007 and continue to currently hold their PNC shares, you have certain options and you should contact the Shareholders Foundation, Inc by email mail@shareholdersfoundation.com or call +1(858) 779 – 1554.

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The Shareholders Foundation, Inc. is an investor advocacy group. We do research related to shareholder issues and inform investors of securities class actions, settlements, judgments, and other legal related news to the stock/financial market. At Shareholders Foundation, Inc. we are in contact with a large number of shareholders. We believe that together we can combine the interests of many investors, and use the size of our interest as leverage against the giant corporations. We offer help, support, and assistance for every shareholder. We help investors find answers to their questions and equitable solutions to their problems. The Shareholders Foundation, Inc. is not a law firm. The information is provided as a public service. It is not intended as legal advice and should not be relied upon.