Following a month in which Smithtown Bancorp announced a quarterly loss, entered into an agreement with regulators to rein in lending and got sued by an institutional investor, the company filed a statement Monday showing the pay of its chairman and chief executive almost doubled in 2009.
The timing wasn't ideal, said Bradley Rock, who has run the company that owns Bank of Smithtown for 20 years. Compensation at the bank always reflects performance in the previous year, he said. Because 2008 was a good year for the bank, 2009 was good for him.
Total compensation went from $1.7 million to $3.4 million. That included a 41 percent increase in salary to $830,769, an incentive pay increase of 34 percent to $375,000 and pension and deferred compensation that increased by $1.3 million.
After a bruising 2009, Rock said his 2010 salary will stay the same and the bank decided not to give incentive pay - intended as reward for good performance - "for anybody, including me."
Rock said the board of directors' compensation committee adjusts pay based on factors including performance, length of service and what similar banks pay their executives.
"We are competing with larger banks not only for the customers and the deposits, but we're also competing with them for the employees," Rock said.
Rock acknowledged the pay may be an issue at the company's annual meeting in May, given its performance at the end of 2009. Some criticism came early, from the attorney who filed the suit claiming the bank ignored sound banking rules and inflated the stock price before it began tumbling last year.
"It just confirms what we already knew, that the bank was run in a reckless manner," Samuel Rudman of Melville said Tuesday. "I'm not surprised in this day and age that a bank would be run down and the executive seeks to be paid for it."
The stock continued to slide Tuesday, falling 23 cents to a 52-week low of $3.88 a share - down 70 percent from its price six months ago.
Radha Gopalan of Washington University in St. Louis, and an executive compensation expert, said shareholder heat might be appropriate. He noted that the bank does not pay bonuses, but the increases to salary could be more damaging.
That's because they're permanent - salaries are hardly ever reduced - and also because the pension and deferred compensation soared because they're based largely on the salary, Gopalan said.
Rock said he remained confident the bank will meet the goals set by regulators to reduce problem loans by June 30.
Although the bank is not lending to new customers, he said, "We do continue to make loans to existing customers."