PROVIDENCE – Ellen Alemany, Citizens Financial Group Inc.’s top executive, has sold her entire stake in Citizens’ British parent, the Royal Bank of Scotland plc, although she is due to receive millions more RBS shares in the coming years if she meets certain financial performance goals, the bank says.
Alemany, chairwoman and CEO of Citizens Financial and RBS Americas, sold 609,324 shares of RBS on Aug. 6 – the same day the troubled financial giant announced its first profit since 2007 in reporting half-year results – according to a company filing.
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RBS stock trades on the London Stock Exchange, and the transaction was valued at about 319,000 British pounds, or about $500,000. RBS documents said Alemany no longer has holdings in the company, although treasury shares are not factored into that calculation.
Providence-based Citizens Financial downplayed Alemany’s action.
The shares recently sold were a small amount compared with the number of shares that she is slated to receive under her compensation agreement with RBS, according to Michael Jones, CFG spokesman.
“I think it’s routine for senior executives to sell shares,” Jones told Providence Business News Wednesday. “This is a fraction of the shares when you include her long-term incentive award.”
According to regulatory filings, Alemany was conditionally awarded 3.64 million RBS shares in March, half of which will vest in June 2011 and the other half the following June.
In May, she also was conditionally awarded 6.19 million shares that will vest in May 2013, provided she meets financial and operational targets and maintains proper risk management over a three-year period.
Alemany has been at Citizens since 2007 and was named CEO of both Citizens Financial and its immediate parent, RBS Americas, in 2009.
Jeff McCutcheon, managing director of the consulting firm Board Advisory LLC and an executive compensation expert, told PBN that it is unusual for senior executives to liquidate an entire position with their employers.
“Disposition of shares is watched by investors as a sign of executive confidence in the equity of the company,” McCutcheon said in an e-mail message recently. “While personal needs may dictate liquidation of some shares in some situations, the executive’s ability to liquidate their shares is typically limited to the number of shares they own above any specific executive investment standards.”
McCutcheon said the trend now among public companies is to require executives to retain shares.
“Within financial services this issue has become more visible in light of bailouts on both sides of the Atlantic,” he said. “A number of financial services companies now advocate share retention through retirement to ensure executives are accountable for the long-term implications of risks undertaken throughout their career.”
In the first half of 2010, Citizens Financial’s largest division lost $67.53 million, a significant improvement over the $263.76 million loss it recorded in the same period last year, the bank said in a recent Federal Deposit Insurance Corporation filing.
RBS Citizens N.A., the holding company for most Citizens and Charter One banks, posted $2.74 billion in interest and non-interest income for the first six months of this year, 15.4 percent less than the $3.24 billion the bank posted in the same period a year ago.
