NEW YORK, April 3 (Reuters) - Trading firm KCG Holdings awarded its chief executive, Daniel Coleman, $10.4 million in 2013, the year in which the company was formed by the $1.4 billion takeover of Knight Capital Group by rival Getco, according to a regulatory filing.
Coleman, who had been CEO of high-speed trader Getco, earned a salary of $500,000, with the remainder of his earnings in stock and options awards, as well as a $700,000 cash bonus, according to the company’s proxy statement with the U.S. Securities and Exchange Commission, released late Thursday.
Coleman’s compensation only included what he made after the takeover of Knight had been completed in July.
Coleman’s base salary going forward will be $1 million
Former Knight CEO Thomas Joyce, who left the company just days after the takeover was completed, was compensated $7.9 million in 2013.
On Aug. 1, 2012, a software problem at Knight caused its automated trading system to flood the market with millions of unintentional orders over a 45-minute period, leaving the firm with a huge position it had to unload at a total loss of $461.1 million.
Following the glitch, Knight secured $400 million in rescue financing - in exchange for a stake of more than 70 percent in the company - from a group of investors that included Getco and was led by Jefferies Group Inc. Jefferies later helped finance Getco’s acquisition of Knight.
After the new company was formed, KCG ended up paying a $12 million fine to the SEC, which found the company had violated certain trading regulations on the day of the glitch.
The same year that Knight had its fatal error, Getco was having its own problems. Profits at Getco plunged 90 percent in 2012 as market volumes and volatility declined, according to a regulatory filing last year.
KCG also said in the filing on Thursday that it had an agreement under which KCG would lease and operate Coleman’s personal aircraft on behalf of KCG on a nonexclusive basis.
The company said it would reimburse Coleman $5,000 per flight hour for use of his aircraft by employees of KCG other than Coleman, though the amount charged in any single year cannot exceed $125,000 without the general approval of KCG’s board. During 2013, KCG reimbursed Coleman $89,110 for use of the aircraft by other KCG employees. (Editing by Eric Walsh)