(ETFC) E*TRADE Financial Doubles CEO’s Pay Package

E*TRADE Financial Corporation’s (ETFC) Chief Executive Officer (CEO) Mr. Steven Freiberg’s total compensation, including a cash bonus, had been raised to $6.3 million in 2011, according to a regulatory filing on Friday. In 2010, Freiberg’s compensation was $3 million.

Freiberg’s pay package includes salary of $1.0 million, a cash bonus of $3.0 million and stock awards of $1.5 million for the year 2011. He has also received $742,497 in options and $44,392 in other compensation. Furthermore, the CEO was granted $3 million worth shares, which will be vested over a period of 4 years.

After Freiberg’s appointment as CEO in April 2010, E*TRADE entered the profit region in 2011 for the first time since 2006. The company reported net income of $156.7 million or 54 cents per share in 2011, up from net loss of $28.5 million or 13 cents per share in the prior year.

Since the U.S. housing market troubles, E*TRADE was been under pressure as billions of losses were recorded on the risky loans in mortgage portfolio of its banking unit. As a result, E*TRADE has been working on its mortgage related issues and has reduced legacy loan portfolio to $13.2 billion in 2011 from $32.0 billion in 2007.

The competitive position of brokerage businesses in the current market depends on trading customers, predominantly active traders. As the long-term investing customer group is less developed, compared with the trading customers, there is an opportunity for future growth as and when the long-term customers expand.

Development of innovative online trading and long-term investing products and services, delivery of advanced customer service, creative and cost-effective marketing and sales as well as expense discipline can be considered as the key factors in executing E*TRADE’s strategy to profitably grow its trading and investing business.

After Freiberg’s appointment as CEO in 2010, E*TRADE’s brokerage business has remained strong with daily average revenue trades (DARTs) totaling 157,000 in 2011, up 4% from 151,000 in the year-ago period, amidst market volatility.

Due to the economic slowdown, many of the senior banking executives had been facing a pay slash. Large U.S. banks such as Bank of America Corporation (BAC), Morgan Stanley (MS) and Goldman Sachs Group Inc. (GS) are trimming the compensations of their CEOs. However, the CEO of JPMorgan Chase & Co. (JPM) still has the benefit of a steady pay structure.

E*TRADE currently retains its Zacks #3 Rank, which translates to a short-term ‘Hold’ rating. Considering the fundamentals, we are also maintaining a long-term “Neutral” recommendation on the stock.
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MORGAN STANLEY (MS): Free Stock Analysis Report

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