By Boris Ladwig, The Republic
bladwig@therepublic.com
Three Irwin Financial Corp. executives stand to receive about $300,000 bonus pay over the next four months while their company struggles through a painful restructuring.
IFC on Tuesday announced details about how it plans to raise $50 million through a stock offering, part of restructuring efforts that have included selling sizable portions of its business.
Executives have said the moves will allow the corporation to return to a more traditional - and less risky - business model of lending to small businesses and branch-based customers.
IFC plans to pay an extra $105,000 to Irwin Union Bank President Brad Kime, $101,000 to Chief Financial Officer Greg Ehlinger and $85,000 to Chief Information Officer Matt Souza over the next four months.
At the end of each of the next four months, the executives will receive payments equal to their base salary. If they leave the company before a payment date, they could get a pro-rated share - or nothing - depending on the circumstances of their exit.
IFC's compensation committee approved the bonus Friday to provide "an incentive for these officers to accomplish the corporation's restructuring plan."
"None of the three have severance benefits and do not ... have written employment contracts," Souza said Wednesday.
Souza said that Chairman and Chief Executive Officer Will Miller recommended to the compensation committee that the three officers receive the bonus to make sure they stay with the company through the restructuring.
Souza said he did not know whether Miller had any indication as to whether the three executives were considering leaving the company.
Aware that executive compensation is under heavy public scrutiny, Miller nonetheless felt that the risk associated with disclosing the bonuses in a difficult economic environment was outweighed by the risk of the officers leaving the corporation at a key moment.
"The company's retention committee felt it important that these individuals be focused on the major elements of the restructuring plan over the next four months," Souza said.
IFC has posted significant losses in the last few quarters, including a $107 million loss in the second quarter.
In 2007, IFC posted a $55 million loss, the first in its 17-year history. Executives expect further restructuring-related losses.
The losses have affected executive compensation.
According to the proxy statement filed before the last shareholder meeting in May, the base salaries of Miller, Ehlinger and others were not changed in 2007 "because of poor consolidated financial performance in 2006."
And Miller has seen the value of his stake in the company decline dramatically: Miller owns more than 11 million common IFC shares, or about 38 percent of the total. In January 2004, those shares were worth about $372 million.
Wednesday, they were worth about $32 million.