Protesters, shareholders vent grievances at BNY Mellon annual meeting
April 11, 2012 8:00 AM
One Pittsburgh protesters chant in the lobby of the Omni William Penn during the BNY Mellon's shareholder meeting Tuesday.
By Patricia Sabatini Pittsburgh Post-Gazette
If Bank of New York Mellon Chairman and CEO Gerald Hassell thought that conducting his first annual shareholders meeting was going to be easy, he couldn't have been more wrong.
Mr. Hassell stood at the podium for nearly two hours Tuesday fielding questions from a contentious crowd -- some affiliated with the protest group One Pittsburgh -- angered over his multimillion dollar pay package and an assertion that the New York-based bank exploits loopholes to avoid paying corporate income taxes in Pennsylvania.
Dozens gather to protest Bank of New York Mellon
Members of One Pittsburgh rally against Bank of New York Mellon during its annual shareholders meeting at the William Penn Hotel. V(ideo by Nate Guidry: 4/10/2012)
"You made $12 million [in 2011]," said one angry shareholder at the Omni William Penn hotel, Downtown. "I don't know how you sleep at night making that when lower-paid employees are making $10 an hour."
Mr. Hassell, 60, who replaced Robert Kelly in the top post last summer, noted that he started at the company "38 years ago as a junior analyst making the wages you are talking about."
"By God's good graces and hard work, I'm in the position I am in today," he said.
That answer didn't sit well with some in the audience, including a local pastor.
"All of God's people deserve an equitable piece of the pie," he told Mr. Hassell. "When you consider some people can't even afford to get to their job, there's something wrong with the picture."
Another shareholder, who said he toiled in the steel mills for 40 years, asked if it was fair that he would have to work some 240 years to earn as much as Mr. Hassell did in a single year.
"I really don't have a comment for that," Mr. Hassell said.
"I appreciate there are a lot of people out of work and struggling," he said later. "Our way of dealing with that is making this company strong."
The CEO also faced a barrage of criticism involving accusations that the trust and custody bank paid no corporate income taxes in Pennsylvania because it was incorporated in Delaware.
Mr. Hassell disputed that claim, saying that incorporating in Delaware was done "for a variety of good business reasons ... not for tax reasons."
"We pay a tremendous amount of taxes in Pennsylvania," he said. "We pay taxes based on where our income is generated."
A spokeswoman later said BNY Mellon paid $7.6 million in corporate income taxes and $17.4 million in capital stock taxes to Pennsylvania last year.
Mr. Hassell also was criticized for the numerous lawsuits the company faces claiming it defrauded pension funds and other large investors by overcharging and misleading them while executing foreign currency trades on their behalf. The New York attorney general's office has estimated the alleged fraud cost clients some $2 billion nationwide.
"We have a different view than what the attorney general alleges," Mr. Hassell said. "We made a profit [on the service] because we took the risk in these trades."
One woman was escorted out of the meeting by security guards after repeatedly shouting her concerns and refusing to be officially recognized at the microphone.
"You think that you make the rules, that you can do whatever you want," she said before being ushered out. "I'm tired of it."
Lois Kreitzer, a fixture at annual meetings in Pittsburgh for years, said she started speaking out against bloated executive compensation 35 years ago and was "thrilled I'm not the only one fighting" anymore.
She urged Mr. Hassell to meet with CEOs across the country, "because I hope you are going to do something before there is a revolution in this country."
"From what I've seen here today, it's coming," she said.
Outside the meeting, members of One Pittsburgh carrying placards that read "Pay your fair share" called on University of Pittsburgh Chancellor Mark Nordenberg to step down from BNY Mellon's board.
The group contended Mr. Nordenberg should not be serving the bank because they believe it pays no corporate income taxes in the state at a time when the university is struggling with cuts to its state funding.
In brief remarks after the meeting, Mr. Hassell called questions about his compensation "inevitable," adding that "everything is relative."
When asked if the uproar would cause the company to hold its annual meeting elsewhere next year, he said the location had not yet been decided.
"We rotate meetings around," he said. "I suspect, not because of this, I know directors would like to visit other sites."
BNY Mellon, formed in 2007 through the merger of Bank of New York and Pittsburgh's Mellon Financial, has held its shareholders meeting in Pittsburgh since 2009.
Mr. Hassell said the board elected not to raise the common stock dividend as some other big banks did after passing the Federal Reserve's stress test in March because "we're a conservative firm." He said the board might consider an increase later this year or early next year.
He said the company was "pretty much" finished with the 1,500 job cuts it announced corporatewide last year, adding that most of the positions were eliminated through attrition.
Two shareholder resolutions were defeated at the meeting: one that would have split the chairman and CEO positions, and another that called for cumulative voting rights allowing shareholders to cast a larger number of votes for a single director nominee.
A "say on pay" advisory resolution approving the compensation for top executives received a majority of votes cast.
A spokeswoman said the company did not expect to have the specific vote totals until today.