Kevin Kabat rose through the ranks of that venerable West Michigan institution, Old Kent Bank & Trust, and played a key role in suppressing a shareholder revolt when the big bank from Cincinnati, Fifth Third Bancorp, gobbled it up in April 2001. Two years later, after Fifth Third reduced Old Kent to its Michigan subsidiary and then ousted its discredited mole, David Wagner, from the top spot there, Kabat took the reins of Fifth Third-Michigan. Then last April, Kabat was rewarded for keeping the Fifth Third-Old Kent merger skeleton in the closet with promotion to chief executive officer of the entire bank. So he packed his bags and moved to Cincinnati.
Now we learn from the Securities & Exchange Commission that after less than a year running the show at Fifth Third Bancorp, the board of directors paid him $10 million in 2007. That includes a base salary of $866,534, perks and benefits totaling $140,400 such as $28,682 in country club dues, a $3,000,0000 performance bonus, and $6,000,000 in Fifth Third stock and options. So Kabat bagged $10 million while his shareholders got what in 2007? Well, Fifth Third's stock (ticker symbol: FITB) plummeted from a high of $43.32 a share in 2007 to $22.13 a share this morning. That wiped out about $10 or $12 billion in shareholder value since Kabat took over.
Well, maybe Kabat deserved his big payday, because in a tough market, he had managed Fifth Third better than its competitors. Sounds good. However, there's the inconvenient fact that Fifth Third's performance ranking has been at or near the bottom of the top fifty largest banks in the U.S. The big bank from Cincinnati continues to sink after the Federal Reserve put the kibosh on ex-CEO George Schaefer's running-on-water strategy designed to outpace the discovery of irregularities in Fifth Third's acquisitions of competitors, especially Old Kent.
And do not doubt that Kabat won a jackpot from the directors. Even Jeffrey Immelt, chairman and CEO of General Electric did not make as much as Kabat. GE's directors paid him only $9.1 million for running a company with a shareholder value thirty times the size of Fifth Third. If Kabat had been paid accordingly, he would not have even earned half of his base salary. It appears that our local boy is still collecting from grateful Fifth Third's directors for keeping shareholders in the dark about the crooked deals surrounding the Fifth Third-Old Kent merger, such as Toxic Towers.