Feb 19 Gleacher & Co, which lost $78 million last year, gave its chief executive officer a cash bonus of $750,000 for his 2012 performance, the New York investment bank said in a U.S. regulatory filing.
The cash payment represents a shift for Gleacher. It gave CEO Thomas Hughes a signing bonus of 1 million shares of restricted stock and 3 million stock options when he joined the company in May 2011 to immediately align his "financial interests with those of our stockholders," its compensation committee said last April. The shares represented 85 percent of his compensation.
The stock awards, valued at $5.3 million based on Gleacher's $1.85 share price when they were granted, have lost much of their value, given the company's 71-cent stock price on Tuesday. The cash award was disclosed in a filing with the Securities and Exchange Commission on Friday.
In reporting its fourth-quarter results on Friday, Gleacher said its compensation and benefit expenses for the period skyrocketed to 81.7 percent of its revenue, far above the 50 percent to 60 percent level that most small Wall Street firms seek.
The compensation ratio at Gleacher reflects its decision to pay its year-end 2012 bonuses primarily in cash to retain executives in the face of the "significant discount" at which its stock is trading, executives said last week. The company's book value, or the worth of its net assets after debt payments, is about $1.45 a share.
Gleacher also said last week that it ended its search for a potential capital infusion or a buyer and was selling its capital-intensive ClearPoint mortgage lending business to a unit of Ocwen Financial Corp. The announcement triggered a nearly 20 percent decline in Gleacher's share price.
Since his arrival in May 2011, Hughes has replaced Gleacher's entire management team, trimmed the balance sheet by more than $2 billion, dismantled the stock trading unit and ended risky activities such as repo lending. But the company also has lost many traders, failed to obtain designations needed to run the mortgage loan business profitably and disappointed investors by not buying back more of its shares.
Hughes said last week that the company is working on a reverse stock split, a move that could help it retain its listing on the Nasdaq Stock Market. Nasdaq requires its listed companies to maintain a share price of at least $1, a target that Gleacher has not hit since early May 2012.
The company also said last week that it would resume a stock repurchase program and has $10 million authorized for the purpose.
Eric Gleacher, who founded the company in 1990 after running the mergers and acquisitions units of Lehman Brothers and Morgan Stanley, stepped down as chairman last month . He had sold most of his interest in the firm in 2009 to a company then known as Broadpoint Securities.
Gleacher posted a fourth-quarter loss of $11.5 million from continuing operations, compared with a year-earlier profit of $1.8 million. Its full-year loss widened to $78.0 million from $64.1 million in 2011.
Net revenue fell 17 percent to $50.9 million in the fourth quarter and dropped 22 percent to $203.6 million for all of 2012.
Shares of Gleacher were off 11 percent at 71.2 cents in afternoon trading.