Having achieved its goal of cracking the top 10 among large banks in return on equity for four straight quarters, Comerica Inc. said it would come through with a promised $10 million of stock bonuses for most of its employees.
Staff members who worked full- or part-time for the Detroit company between April 1 and Dec. 31, 1997 are slated to receive their reward before the end of the quarter. About 9,200 of Comerica's 11,000 employees are eligible for the stock.
The $36 billion-asset company established the return on equity goal last year, at the same time it announced plans to cut 1,900 jobs, or 16% of its work force.
Comerica's return on equity for the full year 1997 was 21.32%, which ranked sixth among large banks. Its return on equity was 21.68% in the fourth quarter.
The company with the highest return on equity in 1997 was Philadelphia- based CoreStates Financial Corp. with 24.18%, according to Keefe, Bruyette & Woods Inc. (First Union Corp., Charlotte, is expected to close its deal to buy CoreStates in the second quarter.)
Comerica announced to its employees at the end of January that it had met its ROE goal, and last month told workers the details of the bonus plan. Eligible full-time employees are to receive stock worth $1,157 each. Part-time employees are to get $578 in stock apiece.
Comerica, having struggled to keep pace with its more profitable banking peers, had been considered a perennial takeover candidate. But its improved performance last year, including its bolstered ROE, has quashed some of the takeover rumors.
"They are very, very focused," said Michael Moran, an analyst with Roney & Co. in Detroit. "What's been the biggest positive has been an almost dramatic cultural shift over the past couple of years toward a more strategic mind-set." Mr. Moran said his firm's concern with the layoffs "had been revenue stall, and that appears not to have happened."
Though it is small, the payout to employees "plants a seed," Mr. Moran said. "It says if peformance continues, there is always potential for reward."