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.

Northern Trust CEO Waddell paid $11.9M, a 42% hike

(Crain's) — Northern Trust Corp. CEO Frederick "Rick" Waddell saw his total compensation for 2009 rise 42% to $11.9 million, including a $2-million cash incentive plan payment.

His 2009 salary increased to $900,000 from $856,250 in 2008, when that salary was the only cash payment Mr. Waddell received. Total compensation for the CEO in 2008 was $8.4 million.

Northern Trust has remained profitable throughout the financial crisis with the exception of the third quarter of 2008, and it reported record net income of $864.2 million last year.

In June it repaid $1.58 billion in preferred shares sold to the Treasury Department under the Troubled Asset Relief Program. Most banks that remain subject to the TARP program have interpreted federal compensation restrictions tied to it as precluding them from paying cash awards to senior executives beyond salary.

In addition to the cash payments, Mr. Waddell received restricted stock in 2009 worth $2.6 million and options worth nearly $5 million.

Northern Trust was founded in 1889 by Byron Laflin Smith and was run by his descendants until 1979. The Smith family continues to hold a substantial equity stake.

Northern Trust axes London-based team

(Reuters) — Asset manager Northern Trust has made redundant the bulk of its active International Equities fund management team in London, sources and a company statement said on Thursday.

Some analysts will continue to operate out of London, but the fund management functions will be handled in Chicago as part of a broader consolidation around key centres, sources at the company said.

The company declined to comment on the number of staff leaving or whether any additions would be made to the team in the United States.

One source at the firm said less than 10 fund managers were losing their jobs in the cull.

The move is further evidence that fee-generating portfolio managers are firmly in the firing line now that fund management firms have started to run out of costs to cut in their back and middle offices.

Consultants have voiced fears that companies might damage their investment performance if they choose to cut back too heavily on fund manager talent.

Following the changes, Northern Trust said it would have over 150 people in its asset management business in London.

Among the team leaving Northern Trust is head of the unit Stephen Dowds. An accomplished classical guitarist, Dowds joined Northern Trust in 2004 after previously acting as chief investment officer at Dryden Capital Management.

One departing member of the team, who spoke on condition of anonymity, said he was not thinking about finding a new job immediately in the current climate.

"I'll probably just go and lie on the beach for a while," he told Reuters.

According to data on Northern Trust's website, the firm's International Growth Equity fund is down 8.43 percent in the year to date. It is down 43.23 percent on a one year view and down 1.6 percent over five years.