E-Trade CEO’s Pay Tops $77 Million

Online brokerage firm E-Trade Group Inc. paid Chief Executive Christos Cotsakos $77 million last year--more than quadruple what any other Wall Street CEO earned.

Cotsakos’ pay included $29 million in restricted stock, forgiveness of a $15-million loan and an additional $15 million for taxes after the loan was reclassified as compensation, according to a Securities and Exchange Commission filing.

E-Trade, the No.3 online brokerage by number of accounts, has had cumulative losses of $253 million since 1997, including a $241-million loss in 2001 as online trading slumped with declining stock markets. E-Trade shares rose 39% last year, following a 72% drop in 2000. E-Trade rose 29 cents to $7.54 Tuesday on the Big Board.

“Shareholders should be asking a lot of questions about the magnitude of the package,” said Bill Coleman, a compensation expert at researcher Salary.com.

Cotsakos’ pay, about 35 times what he earned in 2000, comes as the firm’s board negotiates his new contract, which replaces one expiring in May. The company, which is facing declining trading business and consolidation in the online brokerage industry, said it gave him part of the raise to help retain him.

“It’s ridiculous,” said William Fries, manager of the Thornburg Value Fund, which owned 4.7 million shares of E-Trade as of December. “There are people running companies that are well established, with a ton of responsibility and doing a lot better, and they don’t get paid this much.”

Cotsakos, 53, received $797,880 in salary in 2001 and a cash bonus of $4.1 million, compared with $756,346 in salary and a $1.4-million bonus in 2000. The company paid $2.4 million in taxes on restricted stock that vested during 2001, and $279,678 in taxes on contributions to his retirement plan.

In 2001, Cotsakos made $11 million by exercising options to acquire about 2.6 million shares.

Cotsakos’ pay topped rival executives in the brokerage industry, including Charles Schwab Corp. Schwab cut the pay of its co-CEOs to $850,000 apiece, down 93% from 2000, and awarded no bonuses. Wall Street firms have slashed pay because fewer mergers and acquisitions and reduced demand for stock and bond sales hurt profits.

Calls to Cotsakos’ office weren’t returned. An outside spokeswoman for the firm declined to comment.

E-Trade’s compensation committee is headed by David Hayden, chairman of Critical Path Inc., a software maker in which E-Trade was an early investor and whose board Cotsakos served on. Hayden wasn’t available to comment.