SunTrust’s shareholders were surprisingly respectful at the bank’s annual meeting this morning despite hearing negative financial news and receiving lower stock dividends.
“What a year it has been,” James M Wells III, SunTrust’s CEO, said in his introductory remarks to shareholders.
In looking to the future, Wells said “we know economic recovery is out there,” but he added that the bank did not know when this cycle would end. So he is fully expecting that “2009 will be another difficult year.”
On a more positive note, Wells said that he believes that SunTrust “will emerge from this period in a strong competitive position.” He reinforced the theme of the bank’s new marketing campaign: “Live Solid. Bank Solid.”
He also explained why the bank lowered dividends to shareholders, saying it was a “painful” decision but one that was financially prudent and necessary.
“We review this issue with regularity,” Wells told shareholders.
During the question-and-answer period, a shareholder asked Wells about the federal stress test on banks and whether SunTrust would need to receive more capital from the federal government as other major banks are expected to get.
“Unfortunately, the stress test is a regulatory issue,” Wells said explaining that he is restricted on making any public comments on that. “I find it interesting that others can.”
One shareholder asked about when dividends might be increased. Wells said the board routinely reviews dividends, and he has no way of predicting when the financial picture will improve and dividends can be increased.
Another shareholder asked about executive compensation and the value of stock awards given to top officers.
Wells explained that the compensation committee “meets with regularity” and receives outside advice from consultants on target amounts to remain competitive. The board did make some adjustments downward after the federal government introduced new legislation in February.
“All I can do is assure you that outside perspectives are used,” Wells said.