News Summary
In a notable corporate governance move, shareholders of Metropolitan Commercial Bank voted against a proposed $5.6 million pay package for CEO Mark DeFazio. Nearly 60% of investors rejected the proposal, driven by concerns over the bank’s recent performance and recommendations from Institutional Shareholder Services. This decision marks the bank as the only publicly traded company in New York to face such a vote this year. With a 40% decline in stock price since its 2022 peak, shareholders are increasingly questioning executive compensation, indicating a shift toward greater corporate accountability.
New York City – Shareholders of Metropolitan Commercial Bank have voted against a proposed $5.6 million pay package for CEO Mark DeFazio during the bank’s annual meeting, marking a significant moment in corporate governance. Nearly 60% of investors opted to reject the package, a decision influenced by recommendations from the advisory firm Institutional Shareholder Services (ISS), which raised concerns regarding the appropriateness of the compensation in light of the bank’s recent performance.
The rejection of DeFazio’s pay plan places Metropolitan Commercial Bank in a unique position, as it stands as the only publicly traded company in the New York area to have its executive compensation package voted down this year. Furthermore, only 13 companies nationwide have experienced a similar fate in 2023, according to data shared by consulting firm Semler Brossy.
Concerns Over Performance
Metropolitan Commercial Bank, which focuses on extending loans to nursing homes, currently holds approximately $8 billion in assets. Despite its significant size, the bank has seen its stock price decline around 40% from its peak in 2022, contributing to shareholder dissatisfaction regarding executive pay. DeFazio, who has been with the bank since 2002, received a substantial compensation package last year that included $3.5 million in equity grants, a $1 million salary, and $1.1 million in additional incentives.
Reactions to the Vote
In response to the voting outcome, Metropolitan Commercial Bank has articulated its intention to take the results seriously and to engage in further discussions with its stockholders regarding how executive compensation aligns with overall company performance.
Given the failed vote, it is anticipated that DeFazio and the bank’s board members will focus more on investor relations moving forward, as similar situations typically trigger heightened engagement with shareholders. However, research conducted by Stanford University and Equilar has raised questions about whether such engagements effectively address compensation disputes within corporations. The study also scrutinized the capability of proxy advisories like ISS to accurately pinpoint organizations with problematic pay practices.
Context on Executive Compensation Trends
Since the financial crisis, firms have been mandated to conduct regular votes on shareholder opinions regarding executive compensation practices, often termed “say-on-pay” votes. This year has seen a notably high level of support for these votes, with average approval ratings reaching 92% across approximately 1,100 votes. DeFazio’s pay plan rejection is particularly conspicuous against this backdrop of high approval ratings within the sector.
Future Plans for Metropolitan Commercial Bank
Despite the recent turbulence in executive pay discussions, Metropolitan Commercial Bank is moving forward with additional business strategies, including a new initiative to commence quarterly dividend payments, potentially starting as soon as this quarter. Additionally, the bank is undergoing a capital improvement program, set to renew and expand its lease at 99 Park Avenue, which will increase its space significantly from 55,200 to 81,979 square feet.
The rejection of DeFazio’s pay package, against the backdrop of the bank’s current financial performance, underlines the ongoing tension between executive compensation and corporate accountability in the financial sector. Shareholders’ votes may play an increasingly vital role in shaping the future direction of management practices at Metropolitan Commercial Bank and beyond.
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Additional Resources
- Crain’s New York: Investors Rebuke CEO Over Pay
- Wikipedia: Executive Compensation
- Commercial Observer: Metropolitan Commercial Bank Lease at 99 Park Avenue
- Google Search: Metropolitan Commercial Bank
- Banking Dive: Metropolitan Commercial Bank and Voyager Fraud Lawsuit
- Google Scholar: Executive Compensation Trends
- Connect CRE: Global Holdings Secures Expansion Leases
- Encyclopedia Britannica: Corporate Governance
- Bisnow: This Week’s NY Deal Sheet
- Google News: Metropolitan Commercial Bank CEO Pay
Author: STAFF HERE NEW YORK WRITER
NEW YORK STAFF WRITER The NEW YORK STAFF WRITER represents the experienced team at HERENewYork.com, your go-to source for actionable local news and information in New York, the five boroughs, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as New York Fashion Week, Macy's Thanksgiving Day Parade, and Tribeca Film Festival. Our coverage extends to key organizations like the Greater New York Chamber of Commerce and United Way of New York, plus leading businesses in finance and media that power the local economy such as JPMorgan Chase, Goldman Sachs, and Bloomberg. As part of the broader HERE network, including HEREBuffalo.com, we provide comprehensive, credible insights into New York's dynamic landscape.
