Aurelio Alemán
FIRST BANCORP /PR/About Aurelio Alemán
President & CEO of First BanCorp. (FBP) since September 2009; Director since September 2005; age 66 . He led FBP’s post-crisis turnaround, including a $520M recapitalization in 2011, the Doral Bank transaction (2015), and the acquisition of Banco Santander Puerto Rico (Oct 2020) . 2024 performance: revenue $938M, net income $298.7M, ROAA 1.58% and 100%+ earnings returned via buybacks/dividends/debt redemption; capital ratios remained strong (CET1 16.32%) . Total shareholder return (TSR) since 12/31/2019 implies a $100 investment grew to $206 vs $164 for peer group (S&P Supercom Banks Index) .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| First BanCorp. | Senior EVP & COO | 2005–2009 | Led Retail & Consumer Banking and multiple subsidiaries; advanced IT/operations; prepared for later turnaround as CEO . |
| First BanCorp. | EVP, Consumer Lending | 1998–2009 | Drove consumer businesses; chaired/presided over various subsidiaries (Money Express, Insurance, Leasing) . |
| Citibank, N.A. | VP, Chief of Consumer Indirect Business & Mortgage | 1996–1998 | Led auto finance and retail mortgage for PR . |
| Chase Manhattan Bank, N.A. | VP, Operations & Technology Executive | 1990–1996 | Led retail/corporate banking ops & tech for PR/Eastern Caribbean . |
External Roles
| Organization | Position | Years | Notes |
|---|---|---|---|
| Puerto Rico Bankers Association | President | 2023–present (prior terms 2019–2021; 2011–2013) | Industry leadership . |
| MasterCard LAC Advisory Board | Director | 2012–present | Regional payments advisory role . |
| FBP subsidiaries (e.g., Money Express, First Management PR LLC, FirstBank Insurance Agency, FirstBank Overseas Corp.) | Chair/Director | Various | Governance across key subsidiaries . |
Fixed Compensation
| Metric (CEO) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 989,592 | 1,029,692 | 1,069,692 (raised to $1,080,000 effective 4/1/24) |
| Target Annual Bonus (% of base) | — | — | 115% |
| “Bonus” (broad-based Christmas, $) | 1,200 | 1,200 | 1,200 |
| Actual Annual Incentive ($) | 1,303,232 | 1,286,154 | 1,461,656 |
Notes:
- Target bonus % is disclosed for 2024; STI was paid 117.69% of target for CEO (135.35% of base achieved) .
Performance Compensation
Annual (Short-Term) Incentive – 2024 Structure and Outcomes (CEO)
| Metric | Weight | Target | Actual | Payout contribution (% of base) | Vesting |
|---|---|---|---|---|---|
| Earnings Per Share | 28.75% | $1.64 | $1.81 (110%) | 36.20% | Cash, paid 2025 |
| Pre-tax, Pre-provision Income (non-GAAP) | 28.75% | $455.77M | $451.13M (99%) | 28.02% | Cash, paid 2025 |
| Non-Performing Asset Ratio | 17.25% | 0.92% | 0.61% (134%) | 25.88% | Cash, paid 2025 |
| Efficiency Ratio | 17.25% | 52.39% | 51.92% (101%) | 17.65% | Cash, paid 2025 |
| Individual Performance | 23.00% | Goals set | Achieved (see CD&A) | 27.60% | Cash, paid 2025 |
| Total | 100% | — | — | 135.35% of base; $1,461,656 | Cash, paid 2025 |
Program notes:
- NEO STI opportunities at target were increased for certain NEOs (not CEO) in 2024 review; CEO target remained 115% of base for 2024 .
- Payout curve: 50% at threshold (80% of target goal) to 150% at superior (120% of target goal); zero below threshold .
Long-Term Incentives – 2024 Grants (CEO)
| Component | Target as % of Base | Grant date | Shares/Value | Vesting | Performance goals |
|---|---|---|---|---|---|
| Time-vested Restricted Stock | 100% | 3/21/2024 | 59,942 sh / $1,039,994 (at $17.35) | 50% on 3/21/2026; 50% on 3/21/2027 | Service only |
| Performance Shares (PSUs) | 100% | 3/21/2024 | Target 59,942 sh / $1,102,333; payout 50–150% of target; TSR PSU valued at $19.43 Monte Carlo | Cliff vest 3/21/2027 (2024–2026 cycle) | 50% Tangible BV/share goal $15.51; 50% 3-yr relative TSR vs KBW Regional Bank Index; cap at 100% if TSR negative at 75th percentile |
Program changes:
- CEO LTI target increased from 165% to 200% of base in 2024; others unchanged .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial ownership | 1,132,418 shares (as of 3/24/2025; <1%) . |
| Shares outstanding (for context) | 163,126,093 (record date 3/24/2025) . |
| Ownership % (calc.) | ~0.69% (1,132,418 / 163,126,093) . |
| Unvested time-based RS (12/31/2024) | 208,057 shares . |
| Unearned PSUs (12/31/2024) | 98,778 shares (2023 and 2024 cycles; thresholds/mix assumptions per table footnote) . |
| Beneficial holdings incl. forfeitable | Beneficial table notes 153,201 shares subject to forfeiture under plan (timing differences vs 12/31 snapshot) . |
| Options | Company does not grant options; none outstanding . |
| Ownership guidelines | CEO 5x base salary; all executives in compliance . |
| Hedging/pledging | Prohibited for directors and Section 16 officers; no shorting/margin/hedging . |
Vesting calendar and potential supply:
- 2023 RS: 50% vests 3/16/2026; 2024 RS: 50% vests 3/21/2026 and 3/21/2027 .
- 2023 PSUs: vest 3/16/2026 subject to performance; 2024 PSUs: vest 3/21/2027 subject to performance (0–150% of target) .
Employment Terms
| Term | CEO Contract Summary |
|---|---|
| Agreement effective date; term | 2/24/1998; 4-year term with annual 1-year auto-renewal unless notice ≥90 days prior . |
| Termination without cause | Severance = 4x annual base salary, paid semi-monthly for one year . |
| Change-in-control (CIC) | Single-trigger: lump-sum = 4x (base salary + highest cash performance bonus in prior 4 FYs + value of other benefits in CIC year); termination not required . |
| Potential payouts (as of 12/31/2024) | Termination without cause: $10,024,063 total (cash + equity vesting values). CIC: $16,531,563 total (cash + equity vesting values) . |
| Clawback | Mandatory recovery of erroneously awarded incentive-based pay for “Big R” and “little r” restatements; also for intentional fraud/gross misconduct; applies to current and former Section 16 officers (3 prior FYs) . |
| Benefits/perquisites (2024) | Company vehicle, memberships/dues, life insurance, 1165(e) plan contribution, and armed driver for business; total $99,319 (vehicle $15,641; 1165(e) $7,500; security $60,521; memberships $14,895; life insurance $762) . |
| Pension/SERP | No defined benefit plan; DC plan available (50% match up to 6% subject to PR limits; vesting terms disclosed) . |
Non-CEO reference (for context on governance/fairness):
- Other NEO CIC terms are double-trigger; multiples vary (e.g., CFO 3x salary+highest bonus if terminated within 2 years; CRO 3x salary and 3x average bonus for last 2 years if terminated within 2 years) .
Board Governance and Director Service
- Director since 2005; currently the only non-independent director (employee director); all other eight directors independent per NYSE/SEC standards .
- Committee memberships (2024): Asset/Liability Committee (member), Credit Committee (member) .
- Board structure: Independent Chair (Roberto Herencia) separate from CEO; robust chair duties; executive sessions of independent directors are held regularly .
- Attendance: Board met 9 times in 2024; all current directors attended 100% of Board meetings; all attended 2024 annual meeting .
- Director compensation: Employee directors (including CEO) receive no director fees/equity as directors .
Compensation Structure Analysis
- Mix and risk: Majority of CEO target pay at-risk; 2024 target LTI increased to 200% of base (100% RS + 100% PSUs), increasing equity-based alignment but also severance/CIC dollar values given higher equity .
- Metrics rigor: STI used diversified scorecard (EPS, PTPP, NPA ratio, efficiency ratio, and individual goals); corporate goals largely met/exceeded (EPS 110%, NPA ratio 134%, efficiency 101%) .
- Pay governance: Independent Compensation Committee; independent consultant (Pearl Meyer) with no conflicts; annual risk review concluded plans not likely to have material adverse effect .
- Say-on-Pay: 95.09% approval in 2024, indicating strong shareholder support .
- No hedging/pledging; robust clawback covers “little r” restatements; no stock options granted (no repricing risk) .
Compensation Peer Group (for benchmarking context)
Peer set used for 2024 decisions includes ~20 regional banks (e.g., ABCB, AUB, BKU, BHLB, BPOP, FULT, HWC, PNFP, UCBI, UBSI, UMBF, WSBC, etc.) .
Related Party Transactions and Other Red Flags
- 2024 related person transactions >$120,000: none; insider banking transactions on market terms only .
- Policy controls: Related person transaction policy and approvals; executive sessions; independence determinations .
- Risk indicators: CEO CIC is single-trigger with a 4x multiple (shareholder-unfriendly vs double-trigger market norm), elevating potential payout risk; however, strong clawback, anti-hedging/pledging, and high SOP support mitigate alignment concerns .
Performance & Track Record
- Turnaround and capital actions (2011 recapitalization; Doral Bank transaction 2015; Santander PR acquisition 2020) under his leadership .
- 2024 achievements: EPS beat vs target ($1.81 vs $1.64), NIM 4.25% (+3 bps YoY), strong asset quality (NPAs 0.61%), efficiency ratio 51.92%, core deposit growth +$267.1M, organic loan growth +$569.0M, and >100% earnings returned to shareholders .
- TSR since end-2019 outpaced peer group (FBP $206 vs peer $164 on $100 base) .
Equity Vesting and Potential Insider Selling Pressure
- Scheduled vesting peaks in March 2026 (2023 RS 50% and 2023 PSUs) and March 2027 (2024 RS 50%/50%; 2024 PSUs), which could create mechanical supply as awards deliver; 2024 CEO outstanding at 12/31/24: 208,057 unvested RS; 98,778 unearned PSUs .
- Hedging/pledging bans and ownership guidelines reduce misalignment risk .
Employment & Retention Risk
- CEO contract auto-renews; severance economics are substantial (4x salary WoC; 4x CIC single-trigger), which supports retention but represents elevated shareholder cost upon CIC .
Investment Implications
- Alignment: High at-risk pay, PSU metrics (TBV and relative TSR), 5x ownership guideline, and hedging/pledging prohibitions are favorable for alignment; 95%+ Say-on-Pay support confirms shareholder acceptance .
- Execution: 2024 financial delivery (EPS, credit quality, efficiency) and multi-year TSR outperformance support confidence in continued execution under Alemán .
- Overhang/flow: Material 2026–2027 equity vesting milestones could add supply; monitor Form 4s around those dates for selling pressure (policy allows insider sales within governance rules) .
- Governance risk: Single-trigger 4x CIC for CEO is a notable outlier that could crystallize significant payouts without termination; investors should weigh this in M&A scenarios .
References
All factual statements and data above are sourced from First BanCorp. 2025 DEF 14A (filed April 8, 2025) with citations in-line: .