Top Oppenheimer Executives Scored Big in Covid Year
Oppenheimer & Co. paid Chairman and Chief Executive Albert “Bud” Lowenthal $9.4 million in total compensation in 2020, up 59.6% from 2019, while his son Robert, head of the New York-based firm’s investment banking business, realized a 79.5% comp jump to $7.3 million.
“During 2020, despite the impact of the COVID-19 Pandemic, the company exceeded its own expectations for performance both on a financial basis, as well as in the improvements to our business,” Oppenheimer’s compensation committee wrote in the firm’s proxy statement filed last week.
Bud Lowenthal, 75, controls 97.5% of Oppenheimer’s Class B voting shares and 24.8% of its nonvoting Class A common stock. Shares of the closely held firm rose about 10.7% in 2020.
The firm’s 1,000-broker private client unit produced 54% of 2020 revenue, but the committee said it rewarded Robert Lowenthal, 44, for “the record levels of revenue and pre-tax income reported by the Investment Banking Division, achieved during 2020 despite the COVID-19 Pandemic.” It also “took note of the role played by Mr. R.S. Lowenthal in the Company Covid Response.”
Opco’s 2020 revenue grew 16% to $1.2 billion and net income more than doubled to $123 million from $53.0 million. The private client group, which fueled 54% of the firm’s revenue, reported a 25.1% annual decline in pretax net income to $122.8 million.
Companies have been wrestling since the outbreak of the pandemic with how to correlate executive compensation with changing company priorities, and corporate governance and pay consultants said financial services firms are particularly sensitive to avoiding the appearance of thriving amid the crisis.
“The most common structural annual incentive plan change has been to reduce the target and/ or max payout opportunity” for executives, said a Harvard Business Review article summarizing changes announced by public companies between March 1 and October 9, 2020. Some companies eliminated incentive plans entirely, and many added operational metrics focusing on liquidity and other pandemic-centric measures, the article said.
Many of Oppenheimer’s larger retail brokerage competitors reined in executive compensation in 2020.
LPL Financial reduced CEO Dan Arnold’s package by 5.4% from 2019 to $7.25 million, Ameriprise Financial Chairman and CEO James Cracchiolo received a 15.2% comp reduction to $20.8 million, and Raymond James Chairman and CEO Paul Reilly registered an almost 17% decline to $13.4 million.
Oppenheimer, which upped CFO Jeffrey Alfano’s 2020 compensation by 36% to $1.9 million, took note in its proxy statement of the scrutiny financial firms are receiving.
“In reaching its conclusions, the members of the Compensation Committee were aware of the ongoing focus of the media, the government and the general population on the compensation of executives and employees of financial service companies,” it said. “The Compensation Committee regularly monitors important developments and proposed regulations in compensation practices and seeks to see that its methodology aligns pay practices with corporate objectives and performance and does not encourage excessive risk-taking. The Compensation Committee believes that the 2020 compensation payments made to executives and employees were substantially so aligned.”