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FleetBoston Pay Deal Is Questioned

September 18, 2002

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BOSTON (AP) _ A Wall Street equity analyst raised questions about former FleetBoston Financial Corp. chief executive Terrence Murray’s retirement package on Tuesday, saying it could point to broader concerns about corporate governance in the banking company and in the industry generally.

The report by Prudential Financial analyst Mike Mayo comes a day after former General Electric Co. chairman Jack Welch asked GE to take back his retirement package, which included food and travel expenses, a private car and driver and computer equipment.

FleetBoston’s package gives Murray, who retired last year, an annual $5.8 million pension and other perks. Prudential said the company ``stands out for potentially egregious behavior.″

The report also identifies J.P. Morgan Chase & Co. as another bank ``with potential issues.″

The report says that FleetBoston’s five-member compensation committee, CVS Corp. head Thomas Ryan and NStar CEO Thomas May, do not appear to be genuinely independent. Murray sits on CVS’s compensation committee, and current Fleet CEO Charles Gifford sits on NStar’s.

Murray’s package was sharply criticized by some shareholders at FleetBoston’s most recent annual meeting.

FleetBoston spokesman James Mahoney said the company has not considered changing the package. He said the board had considered that during Murray’s tenure, his ``compensation as CEO lagged the compensation of comparably-sized bank CEOs.″

``The terms of the retirement package were set by the board of directors last year, and reflected their determination as to what was appropriate given Mr. Murray’s tenure at Fleet in which the market capitalization of the company went from a few billion to about 40 billion,″ he said.

FleetBoston shares closed down 42 cents at $23.23 in trading Tuesday on the New York Stock Exchange.

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