KeyBank last week granted $16.7 million in performance-based equity awards to five of its top executives, according to a Securities and Exchange Commission filing.
KeyBank CEO Chris Gorman would receive $7.57 million if the bank were to reach certain regulatory capital requirements, earnings-per-share goals and common equity tier 1 figures in 2025 and 2026, the bank stated last week.
The awards come in connection with the $2.8 billion investment Scotiabank made in the Cleveland-based lender. The Canadian bank now owns 14.9% of KeyBank after closing Phase 2 of the investment Dec. 27. The Federal Reserve two weeks earlier signaled its approval of the deal, initially announced in August.
In addition to Gorman, KeyBank CFO Clark Khayat would receive nearly $2.93 million in equity, according to last week’s filing. Randy Paine, Key’s head of institutional banking, would receive $2.61 million. Angela Mago, the bank’s chief human resources officer, would get $1.98 million. And Amy Brady, the bank’s chief information officer, would receive $1.62 million.
The awards aren’t capped at those figures, though. Payouts can vary up to 150% of the target value. Gorman, for example, could receive up to $11.35 million under that logic. The awards are set to vest in January 2027. Shares to be vested are subject to a one-year holding period.
The target amounts announced last week generally track with long-term incentives listed for each of the executives in last year’s proxy filing. (Gorman received $7 million in long-term incentives in 2023, it indicated. Paine received $2.2 million. Mago received $1.9 million. And Brady received $1.5 million.)
The newly announced awards are separate from the bank’s long-term incentive program, though, a KeyBank spokesperson told American Banker.
The awards are meant to “increase long-term Company stock ownership levels by the executives and retain the talent the Company needs to continue to generate and deliver long-term shareholder value” after the Scotiabank investment, KeyBank said.
KeyBank’s board also expanded to 15 members last week as Scotia named two directors – Jacqui Allard and Somesh Khanna – to begin serving immediately. Allard is head of Scotiabank’s wealth management division and an alum of Royal Bank of Canada and State Street. Khanna is a 26-year veteran of McKinsey who, at one point, co-led the consulting firm’s global banking and securities practice.
KeyBank is set to announce its fourth-quarter earnings Jan. 21. That should offer an update to the Cleveland lender’s financial picture. Before Phase 2 of the Scotia investment closed, KeyBank repositioned its available-for-sale investment securities portfolio by selling $3 billion in low-yielding investment securities and terminating roughly $3 billion in cash flow hedges. The bank is expected to take an after-tax loss of about $700 million in the fourth quarter because of the move, according to the Dec. 27 filing.