Canadian Imperial Bank of Commerce has made good on its promise to keep key PrivateBancorp executives.
The Toronto company agreed in June to pay $3.8 billion to buy the $18.2 billion-asset Chicago company. Many industry observers said retaining top Private executives, including Chairman and Chief Executive Larry Richman, was essential to make the acquisition work.
CIBC disclosed in a recent regulatory filing that Richman will stay around for five years after the deal is completed, including three years as president and CEO of PirvateBank and head of the U.S. region for CIBC.
Under terms of the employment agreement, Richman will receive $8.2 million in cash and deferred shares for staying with the bank. He will have an annual base salary of roughly $1 million and annual incentive pay of roughly $3.7 million during the initial three-year period. After that, he will continue to serve as executive chairman for PrivateBank for two years, with his pay halved.
"If you have an out-of-market, out-of-country buyer making a pretty big investment, you want the right people in there to run the business," said Christopher McGratty, an analyst at Keefe, Bruyette & Woods. "It's important that [Richman] stays on."
Richman's retention was important because Private's employees are loyal to him, McGratty said. The veteran banker also knows the Chicago market and has important connections in the community.
CIBC is "not making any sharp changes to the business," McGratty said.
Private was largely transformed when it hired more than 100 former LaSalle Bank employees, including Richman, after Bank of America bought LaSalle in 2007.
Other executives – Kevin Killips, chief financial officer; Bruce Hague, president of national commercial banking and regional markets; Bruce Lubin, president of Illinois commercial banking; and Karen Case, president of commercial real estate – are also being retained. Those bankers will receive a total of $4.1 million in cash and stock. Four other unnamed executives will receive a total of roughly $3.6 million, the filing said.
The payouts were first reported by Crain's Chicago Business.