Ian Arnof, chief executive of First Commerce Corp., will soon join a growing circle of top bankers who have reached their own financial Shangri- la.
On June 12, First Commerce shareholders are expected to approve the sale of the New Orleans banking company to Banc One Corp. for nearly $3 billion.
Mr. Arnof, 57, is expected to become chairman of Banc One Louisiana and move to Carmel, Calif., people close to him said.
After exercising his First Commerce options, selling his stock, and collecting his severance, Mr. Arnof should head west with at least $30.4 million, according to proxy statements filed Wednesday with the Securities and Exchange Commission.
And he can expect more money and stock from being a chairman at BancOne, the people close to him said.
The impending First Commerce sale is part of an unprecedented tide of bank mergers that is largely being driven by historic changes sweeping across the financial services landscape.
But more than ever, investment bankers and analysts said, the size of the personal payday is increasingly important as chief executives weigh whether to sell.
"Twenty-five million dollars is the starting rate," said Thomas H. Hanley, a bank analyst at UBS Securities. "At least it was in March. With the huge deals we've seen lately, things might have changed."
Of course, the numbers can get much, much bigger. CoreStates Financial Corp. chief Terrence A. Larsen stands to make an estimated $100 million from selling his company to First Union Corp., and Barnett Banks Inc. chief Charles E. Rice made even more in selling to NationsBank Corp.
The big payments can come from the acquiring bank offering lucrative employment contracts. But mainly they come from CEOs cashing in on the big stock positions amassed while running their companies.
These positions have grown markedly in recent years in response to investor demands to tie executive pay to company performance. "Banks have come a long way in considering shareholders' interests," Credit Suisse First Boston analyst Michael L. Mayo wrote in a recent report.
Amassing a large trove of restricted stock and options could be a sign that a CEO is thinking about selling, analysts said, especially if the CEO gets an unusually big restricted stock or option grant.
That's because executives, who ordinarily must hold their restricted stock and options for several years before cashing them in, can cash in their restricted holdings and take advantage of today's bull market if their company is sold.
Perhaps the most striking example of a bank CEO loading up on options before a sale came at BankAmerica Corp. David A. Coulter was granted 1.9 million options in 1997, with a market value of about $15.6 million, after having been granted 250,000 in both 1996 and 1995. In April, BankAmerica agreed to sell to NationsBank Corp.
CEOs who have amassed large amounts of restricted holdings include KeyCorp's Robert W. Gillespie, who was granted options on 400,000 shares in 1997, a big jump from 130,000 in 1996, according to research prepared by UBS Securities. The value of Mr. Gillespie's options is now about $23 million, and he owns 1.1 million common shares.
Compass Bancshares granted chief executive officer D. Paul Jones Jr. restricted stock worth nearly $979,000 in 1997-only $15,000 less than he was paid in salary and bonus. Mr. Jones owns 781,000 Compass common shares.
Comerica Inc. chief Eugene A. Miller was granted options on 75,000 shares last year, bringing the value of his options in case of a sale to $24.6 million. He owns 465,000 common shares.
T. Joseph Semrod, chief of Summit Bancorp, would appear positioned to benefit the most of any banking executive from a merger. He was granted restricted stock worth $1.6 million last year and owns 1.1 million common shares. After a grant of 129,000 options last year, he now owns options that could be cashed in for $31.4 million, should his New Jersey banking company be sold.
