CIT Adds a Year to Peek's Contract
Extension Comes Amid Liquidity Crisis as Lender Aims to Avoid Bankruptcy Filing.
CIT Group Inc. extended the employment contract of Chairman and Chief Executive Jeffrey Peek for a year, according to a regulatory filing.
Mr. Peek's extension comes amid CIT's efforts to avoid a bankruptcy-protection filing. The century-old lender has been hurt by a liquidity crisis as its customers drew down credit lines in fear that they might disappear.
Jeffrey Peek will get another year to try to turn around CIT. Here, Mr. Peek speaks at a dedication for CIT's headquarters in New York in 2006.
Mr. Peek declined to comment through a spokesman. A CIT spokesman declined to comment beyond the filing.
"In the current context, the extension does make sense to minimize disruptions," said Sameer Gokhale, an analyst at Keefe, Bruyette & Woods. "The company's in the midst of a substantial restructuring. It doesn't make sense to bring in a new chief executive, which would add an element of uncertainty."
The extension, through Sept. 2, 2010, amends Mr. Peek's employment agreement with the lender dated Dec. 10, 2007.
The filing on Friday didn't state Mr. Peek's salary for 2010. His base salary was $800,000 in 2009, unchanged from at least 2006, according to regulatory filings. He received no cash bonus last year. He received a retention bonus for 2007 valued at $3.17 million that would be paid out over two years. At the time, the bonus was valued at CIT's prevailing share price of $21.15. The ultimate payout in 2010, which is tied to CIT's share price, could be lower or higher.
A spokesman declined to comment on compensation for 2010.
Mr. Peek's compensation is limited by federal rules for banks and bank-holding companies that have received government funds, CIT's board said in a letter Wednesday to the chief executive. This letter was included in the company's filing with the Securities and Exchange Commission on Friday. CIT received $2.3 billion from the Troubled Asset Relief Program in December, after winning approval to become a bank-holding company.
The board's letter also confirmed the elimination of Mr. Peek's use of the company aircraft as a benefit. CIT said it would pay as much as $85,000 of Mr. Peek's legal and advisory bills related to negotiation of his contract renewal, according to the letter.
"I think the extension's necessary," said Dwayne Moyers, chief investment officer at SMH Capital Advisors in Fort Worth, Texas, which owns CIT bonds. "You don't need to have a transition right now with the problems facing the company."
Earlier in the week, the lender said it was forced to defer a $22.9 million interest payment due next month after failing to meet some conditions in a debt agreement.
Extension Comes Amid Liquidity Crisis as Lender Aims to Avoid Bankruptcy Filing.
CIT Group Inc. extended the employment contract of Chairman and Chief Executive Jeffrey Peek for a year, according to a regulatory filing.
Mr. Peek's extension comes amid CIT's efforts to avoid a bankruptcy-protection filing. The century-old lender has been hurt by a liquidity crisis as its customers drew down credit lines in fear that they might disappear.
Jeffrey Peek will get another year to try to turn around CIT. Here, Mr. Peek speaks at a dedication for CIT's headquarters in New York in 2006.
Mr. Peek declined to comment through a spokesman. A CIT spokesman declined to comment beyond the filing.
"In the current context, the extension does make sense to minimize disruptions," said Sameer Gokhale, an analyst at Keefe, Bruyette & Woods. "The company's in the midst of a substantial restructuring. It doesn't make sense to bring in a new chief executive, which would add an element of uncertainty."
The extension, through Sept. 2, 2010, amends Mr. Peek's employment agreement with the lender dated Dec. 10, 2007.
The filing on Friday didn't state Mr. Peek's salary for 2010. His base salary was $800,000 in 2009, unchanged from at least 2006, according to regulatory filings. He received no cash bonus last year. He received a retention bonus for 2007 valued at $3.17 million that would be paid out over two years. At the time, the bonus was valued at CIT's prevailing share price of $21.15. The ultimate payout in 2010, which is tied to CIT's share price, could be lower or higher.
A spokesman declined to comment on compensation for 2010.
Mr. Peek's compensation is limited by federal rules for banks and bank-holding companies that have received government funds, CIT's board said in a letter Wednesday to the chief executive. This letter was included in the company's filing with the Securities and Exchange Commission on Friday. CIT received $2.3 billion from the Troubled Asset Relief Program in December, after winning approval to become a bank-holding company.
The board's letter also confirmed the elimination of Mr. Peek's use of the company aircraft as a benefit. CIT said it would pay as much as $85,000 of Mr. Peek's legal and advisory bills related to negotiation of his contract renewal, according to the letter.
"I think the extension's necessary," said Dwayne Moyers, chief investment officer at SMH Capital Advisors in Fort Worth, Texas, which owns CIT bonds. "You don't need to have a transition right now with the problems facing the company."
Earlier in the week, the lender said it was forced to defer a $22.9 million interest payment due next month after failing to meet some conditions in a debt agreement.
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