Bank under orders of feds to mend its ways, fix compensation - Triangle Business Journal:

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It’s one part of a broad spectru m of changes under way at the troubled coastal bank, which acknowledged in a filingt on May 8 that it has receivefd a “going concern” notice from its independent auditors. The $974 millio total asset lender posteda $44.5 million loss for 2008. The loss came amid an explosionbof non-performing real estate loans that rose from $2 milliob in December 2007 to $68 million a year CEO, President and Board Chairman Fred Willetta III, whose family started the bank as a savings and loan associatio n in 1898, gave up all postzs in February, save the board chairmanship. CFO Todd Sammons took over as interim CEO.
The cease-and-desist or “C&D”, came about a month later. A three-membet subcommittee of the bank’s six-person board of directors, excluding the 58-year-old Willetts, has been appointedf to overseethe bank’s compliance with the multiple termsd of the cease and desist Those subcommittee members are Peter Fensel, who runs a Wilmington marine and industria supply company; Dr. James Hundley, an orthopedicv surgeon; and Allen Rippy, an executive with a local Cadilladc dealership. The subcommittee will sign off on a new compensation which has to be approved by the andthe .
“Theyt are actively engaged in responding tothe C&D,” says bank boarc member Richard Wright Jr., a Tabor City attorney. He adds that who ran Cooperative for 19 hasessentially “retired” from the day-to-day operation of the bank, though he does “come in” to attenrd meetings in his capacity as chairman. Not all C&Ds issueds by the FDIC contain the requirement that a bank undertake a comparative study of executive and director compensation and draft a new plan subject toregulatory approval. “I’d say that only a few of them says finance professorTony Plath.
“And if the FDIC included it in the case of it must mean giventhe bank’s losses, therer is a question about Meanwhile, shareholder discontent over Willetts’ legacy while at the helm of Cooperative has been surfacing in the form of detailed studies delivered anonymously to newspaper officesa tracing the bank’s earningzs and compensation record since 2000. “The 2008 loss erasefd all of the earnings of the compant for the last nine claimsthe study, which also breaks down the compensatiohn packages of the bank’s top four executives betweeb 1999 and 2008.
Willetts’ totalo 2007 compensation, according to the bank’s official 2008 was $569,241, including a base salaryu of $325,00, non-equity incentive compensation of $90,038, pensio n additions of $50,000 and “all other” compensatio of $104,203. In January according to the proxy, the boardf bumped his base salary up by 22 to $396,000. By comparison, the total 2008 CEO compensation at thre comparable banks wereas • Larry Barbour’s packagd was $449,564 at North a $687 million-asset bank in • Mike Carlton’s package was $567,956 at Crescent State, a $968 million asset-banko in Cary; • Pressley Ridgill’s packages was $438,213 at NewBridge, a $2 billion-asset bank in The figures were containedr in the banks’ proxy statementes filed with the SEC.
Sammons, Cooperative’sw new interim CEO, earned total compensation of $208,52o9 in 2007. Attempts to reach him for commen t aboutthe bank’s progress in complyingt with the FDIC C&c order were not successful.