Magazine article American Banker

Fleet Sets Staff Bonus Tied to Efficiency, Stock Price

Magazine article American Banker

Fleet Sets Staff Bonus Tied to Efficiency, Stock Price

Article excerpt

Fleet Financial Group has created a "phantom stock-option plan" to encourage employees to buy into its cost-cutting program.

Fleet told about 20,000 employees that it will set aside money from them if the banking company improves its efficiency ratio to 60% by March 31, 1995. Today, that ratio stands at 66%, which means Fleet spends 66 cents for every $1 of revenue.

To help improve the ratio, Fleet in July unveiled "Fleet Focus 1994" - a seven-month expense review that will ultimately result in staff reductions at the Providence, R.I.-based banking company. Fleet is asking all its employees in the Northeast to improve their units' profitability by 50%.

Fighting Layoff Anxiety

Bank officials hope the phantom stock-option program will lessen anxiety that the cost-cutting effort is likely to produce in Fleet's work force.

"When you go through a study like this, it creates morale problems and uncertainty," said Eugene M. McQuade, Fleet's chief financial officer. "This program is employee-driven from the bottom up, so we wanted to reward them."

The size of the pool is intended to reflect the increase in Fleet's stock price between July 27, 1993, and March 31, 1995.

Fleet will contribute to the pool the equivalent of the proceeds of one million to three million shares of its common stock multiplied by the growth in its stock price from the day Fleet Focus was announced to the average price for March 1995.

Share Price Eases

On July 27, Fleet Focus' launch date, Fleet's stock closed at $33. …

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