Northern Trust CEO Waddell got $12.8M, an 8% raise

(Crain's) — Northern Trust Corp. Chairman and CEO Frederick H. (Rick) Waddell saw his 2010 total compensation rise 8% to $12.8 million, despite a decline in net income and stock performance that trailed peers.

A substantial increase in the value of his pension benefits and other deferred compensation accounted for much of the rise in Mr. Waddell’s pay, according to the proxy statement filed Monday with the Securities and Exchange Commission by Chicago’s largest headquartered bank.

Mr. Waddell’s salary of $900,000 and cash incentive plan compensation of $2 million equaled those figures for 2009, despite a 15% decline in operating earnings last year to $649 million.

Stock awards for Mr. Waddell, 57, totaled $3.5 million, and option awards totaled nearly $3 million, down from a combined $7.6 million in such awards in 2009.

In discussing its executive pay decisions, the board noted that Northern’s client assets under custody grew 12% in 2010, while assets under management (where Northern makes the investment decisions for clients) increased 3%. It also noted that shareholders overwhelming backed the company’s executive compensation in an advisory vote at the 2010 annual meeting.

Northern’s stock price increased 5.7% in 2010, trailing the performance of chief trust bank rivals Boston-based State Street Corp. (up 6.4%) and New York-based Bank of New York Mellon Corp. (up 8%). Historically low interest rates held back profits at all the trust banks, which safeguard assets and process transactions for big institutional investors globally.