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Founder of First Republic Bank and Family Members got paid significantly
According to public disclosures made as part of annual filings, First Republic Bank has paid millions of dollars to family members of its founder, James Herbert, for their work at the bank in recent years.
Mr. Herbert, who served as the bank's chief executive before transitioning to the role of executive chairman last year, received $17.8 million in compensation in 2021, which is higher than what most CEOs at similar-sized banks received. The bank also paid $2.3 million to a consulting company owned by Mr. Herbert's brother-in-law for advisory work related to investment portfolio, risk management, interest rate, and economic outlook.
Additionally, Mr. Herbert's son was paid $3.5 million to oversee a lending unit at the bank. Both family members received similar amounts in 2020. Despite being the 14th largest bank in the country measured by assets at the end of 2022, First Republic Bank's stock has dropped over 90% in the past three weeks due to contagion fears in the U.S. banking system.
The payments to Mr. Herbert's family members are higher than those typically paid to family members of top executives at similar-sized banks. The disclosures show that many midsize and large banks employ top executives' family members, but they are typically paid less, often under $250,000.
James Herbert received a higher compensation than CEOs of similar-sized institutions. In 2021, Mr. Herbert received $17.8 million, which is more than the CEOs of Bank of New York Mellon and Silicon Valley Bank, both of which have assets larger than First Republic. The compensation is comparable to the pay of CEOs of larger banks, such as U.S. Bancorp and Citigroup, whose CEOs earned $19.1 million and $20.5 million, respectively, in 2021.