First Horizon gives its CEO a pay hike, seeks to retain him until 2028
After First Horizon Corp.'s sale to TD Bank fell through this spring, the Memphis, Tennessee-based bank is taking steps to retain its longtime president, chairman and CEO.
Bryan Jordan, 61, has been First Horizon's chief executive since 2008. Under a new employment agreement announced Thursday, he is now under contract with the $85.1 billion-asset bank until 2028.
Jordan will receive approximately a 6% salary hike and a higher target for long-term award under the deal's terms. The contract also includes provisions for special equity awards that incentivize Jordan to stay on the job for its entire five-year duration.
Analysts said that the salary increase is modest, and that the employment deal lines up with shareholders' expectations.
"I think Bryan Jordan is a key talent who needs to be retained. The merger cancellation in May makes this a necessary maneuver," said Christopher Marinac, director of research at Janney Montgomery Scott. "The 6% salary adjustment covers a portion of inflation in all prices which have occurred since the TD agreement was announced in late February 2022."
The five-year extension could be a play to keep Jordan at First Horizon until his retirement, said Jacob Thompson, managing director at SAMCO Capital Markets.
"I think it also is a way to ensure stability of leadership and management going forward," Thompson added, noting that the bank has been outperforming its peer group on key performance categories such as its return on average assets, net interest margin and efficiency ratio.
Jordan, who previously served as chief financial officer at Regions Financial, joined First Horizon as CFO in 2007 and took the bank's helm a year later. First Horizon was the U.S.'s 35th largest bank by assets as of March 31.
In 2019, Jordan spearheaded a nearly $4 billion merger with Lafayette, Louisiana-based Iberiabank that grew First Horizon's assets 72.4% to $75 billion.
In February 2022, Toronto-based TD approached First Horizon with a merger deal valued at $13.4 billion. But the acquisition was called off earlier this year — reportedly due to regulators' concerns about TD's anti-money-laundering practices.
Even though the merger ultimately failed, shareholders praised Jordan's handling of the deal, said Brady Gailey, managing director at Keefe Bruyette & Woods.
"He navigated the attempted TD merger in a very shareholder-friendly fashion. That deal was terminated because TD had regulatory issues from their side, and they could not get the approval," Gailey said. "Bryan didn't want to sell the company. But at that price, you have to do what is right."
Since the TD deal crumbled, First Horizon has scrambled to implement Plan B.
In the second quarter, the bank increased its interest-bearing deposits by 15.6% to $46.6 billion. The company paid up for that growth, with interest-bearing deposit costs rising from 1.73% to 2.55%.
Jordan's new package suggests that First Horizon's board believes that retaining him is critical as the company charts an independent course in the coming years.
Under Jordan's new contract, his base salary is $1.125 million, which represents a 6% raise, and can be increased over the next five years, but not lowered. His bonus will be fixed at 150% of his salary. And the target amount of his annual long-term awards will increase next year from 400% of his salary to 450%.
In addition, if Jordan meets certain performance requirements, he will receive a special equity award valued at $3 million in performance stock units and $2 million in non-performance stock units. Those awards will not vest until Jordan finishes the five-year contract.
In 2022, Jordan's total direct compensation — including salary, bonus and long-term awards — was $7.135 million.
During First Horizon's most recent earnings call, Jordan said that the company is planning to cross-sell more products to its customers and beef up its presence throughout high-growth markets in the South.
Even while banks are growing less in the face of some economic headwinds, Keefe Bruyette & Woods' Gailey said that he is optimistic about First Horizon's prospects under Jordan's leadership.
"First Horizon is a long-time dominant Southeast franchise," Gailey said. "They have a decent size and scale. And they're located in some of the most attractive Southern markets out there. So I think over the next five years, there's a big growth potential."
