Joseph M. Otting
Executive Chairman, President and Chief Executive Officer at FLAGSTAR BANK, NATIONAL ASSOCIATION
CEO
Executive
Board
About Joseph M. Otting
Joseph M. Otting (age 67) is Executive Chairman, President and CEO of FLG and Flagstar Bank, N.A.; he joined as an employee on March 6, 2024, became CEO on April 1, 2024, and was named Executive Chairman on June 5, 2024 . He previously served as the 31st U.S. Comptroller of the Currency (2017–2020), and held senior banking roles at CIT, OneWest Bank, U.S. Bancorp, Union Bank of California, and Bank of America; he holds a BA in management from the University of Northern Iowa and completed the School of Credit and Financial Management at Dartmouth . 2024 pay was designed to attract turnaround leadership, with 89% of CEO pay at-risk; company performance that year included a TSR value of $34.14 (on a $100 base) versus $143.68 for the S&P U.S. BMI Banks Index, net loss of $1,118 million, and diluted EPS of -$3.49 .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Office of the Comptroller of the Currency | 31st Comptroller of the Currency | 2017–2020 | Led OCC; senior U.S. bank regulator |
| CIT Bank / CIT Group Inc. | President of CIT Bank; Co-President of CIT Group Inc. | Aug–Dec 2015 | Senior leadership at national bank/holding company |
| OneWest Bank, N.A. | President, CEO, Director | Not disclosed | Led regional bank, board service |
| U.S. Bancorp | Vice Chairman; member of Executive Management Committee; director of main subsidiary banks | Not disclosed | Managed Commercial Banking Group; enterprise leadership |
| Union Bank of California | EVP, Group Head of Commercial Banking | 1994–2001 | Led commercial banking unit |
| Bank of America | Branch mgmt., preferred banking, commercial lending | Not disclosed | Frontline and lending leadership roles |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Andalusian Credit Company | Chairman of the Board | Not disclosed | Current |
| Operation Hope | Governing Board of Directors | Not disclosed | Current |
| Talino Labs | Board member | Not disclosed | Current |
| Blockchain | Board member | Not disclosed | Current |
| OASIS | Board member | Not disclosed | Current |
| Various chambers/boards (e.g., CA Chamber, Oregon Business Council) | Director/member | Not disclosed | Prior civic/industry roles |
Fixed Compensation
| Item | 2024 |
|---|---|
| CEO base salary rate | $1,250,000 (set upon hire) |
| Salary paid (partial year) | $918,269 |
| Target annual incentive | $2,250,000 |
| Actual annual incentive paid | $2,250,000 (100% of target) |
| All other compensation | $148,803 |
| CEO pay ratio | 464:1 |
| CEO pay ratio excluding one-time option grant | 44:1 (adjusted) |
Notes:
- 2024 CEO pay was heavily at-risk (89% of total direct compensation) given turnaround objectives .
Performance Compensation
Annual Incentive Plan (AIP) – 2024
| Metric category | Weighting | Target | Actual | Payout |
|---|---|---|---|---|
| Improve regulatory performance and risk controls | Not disclosed | Qualitative | Achieved | Paid at 100% of target ($2,250,000) |
| Bolster management talent | Not disclosed | Qualitative | Achieved | Included in payout |
| Execute milestones toward diversified regional bank | Not disclosed | Qualitative | Achieved | Included in payout |
| Enhance capital/liquidity, reporting, and expense reductions | Not disclosed | Qualitative | Achieved | Included in payout |
- Plan design in 2024 prioritized stabilization over traditional financial metrics; no threshold level; CEO maximum was 200% of target .
Long-Term Equity – 2024 Grants
| Award type | Grant date | Quantity | Exercise price | Vesting | Grant-date fair value |
|---|---|---|---|---|---|
| Stock options (special, one-time) | Mar 6, 2024 | 5,000,000 | $6.00 | Vests quarterly over 3 years | $31,500,000 |
- These inducement awards (reverse-split adjusted) are intended to cover ~three years and are not expected to recur annually .
Equity Ownership & Alignment
| Ownership / Policy | Detail |
|---|---|
| Total beneficial ownership | 1,919,615 shares; 0.460% of outstanding |
| Options exercisable (within 60 days of record date) | 1,666,664 options (CEO) |
| Restricted stock units vesting within 60 days | 252,951 RSUs (CEO) |
| CEO stock ownership guideline | 6x base salary |
| Hedging / pledging | Prohibited for officers and directors |
Notes:
- CEO one-time option grant vested quarterly over 3 years (supply over time), which can create periodic selling capacity as tranches vest; hedging/pledging prohibitions mitigate misalignment risk .
Employment Terms
| Term/Provision | Details |
|---|---|
| Employment agreement term | Through March 31, 2027 |
| Base salary (rate) | $1,250,000 (subject to annual review) |
| Target/Max annual bonus | Target $2,250,000; Max 200% of target |
| Long-term incentives | Eligible per Board determination |
| Health benefits post-termination | Company-paid healthcare up to 18 months if terminated without cause/for good reason |
| 280G treatment | “Best net benefits” cutback – reduce only if improves after-tax outcome; no excise tax gross-up |
| Clawback | NYSE/SEC-compliant recoupment policy; broader misconduct/risk recoupment policy also in place |
| Hedging/pledging | Prohibited |
Potential Payments (as of Dec 31, 2024; stock at $9.33)
| Scenario | Employment Agreement cash | Accelerated equity | Company-paid benefits | Total |
|---|---|---|---|---|
| Death | — | $12,485,835 | — | $12,485,835 |
| Disability | — | $12,485,835 | — | $12,485,835 |
| Involuntary termination without cause / resignation for good reason (pre-CIC) | $8,166,667 | $12,485,835 | $25,000 | $20,677,502 |
| Involuntary termination without cause / resignation for good reason (upon/after CIC) | $8,166,667 | $12,485,835 | $25,000 | $20,677,502 |
Notes:
- Agreement provides for accelerated vesting of all outstanding equity upon qualifying termination; options remain exercisable for full terms; performance awards deemed at target . Company states it does not allow single-trigger payouts under employment and CIC agreements .
Board Governance
- Board service: Director since 2024; Executive Chairman since June 5, 2024; CEO since April 1, 2024 .
- Committees: Executive Committee (Chair); Technology Committee .
- Independence: CEO/Executive Chairman status; Board lists 7 of 9 directors as independent (Otting is not) .
- Combined Chair/CEO: Board permits combining/separating roles; Lead Independent Director (Steven T. Mnuchin) presides over executive sessions, sets agendas with Chair, and oversees evaluations/shareholder engagement to mitigate independence concerns .
Performance & Track Record
| Measure | 2024 |
|---|---|
| Compensation Actually Paid to CEO (aggregate for 2024 CEOs) | $28,467,075 |
| Company TSR (value of $100) | $34.14 |
| S&P U.S. BMI Banks Index (value of $100) | $143.68 |
| Net (loss) income | $(1,118) million |
| Diluted EPS | $(3.49) |
- Say-on-pay: Majority support in 2024; 2025 vote scheduled (annual) .
Compensation Structure Analysis
- Mix/at-risk: CEO total direct compensation was 89% at-risk in 2024, aligning incentives with turnaround objectives .
- Shift to options: One-time, multi-year option awards replaced prior PSU-centric design to attract/retain turnaround team; options vest over three years and are not expected to recur annually .
- Governance guardrails: No single-trigger CIC payouts; no excise tax gross-ups for severance; strong clawback, anti-hedging and anti-pledging policies .
Related Party Transactions and Policies
- Banking law constraints and Board review apply to any executive/director loans; related-person transactions are reviewed for fairness and policy compliance; March 2024 capital raise involved investors associated with current directors (Liberty, Reverence) per disclosed relationships .
Equity Ownership & Alignment (detail)
| Item | Amount / Policy |
|---|---|
| CEO beneficial ownership | 1,919,615 shares (0.460% of class) |
| Options exercisable within 60 days | 1,666,664 (CEO) |
| RSUs vesting within 60 days | 252,951 (CEO) |
| Executive ownership guideline | CEO: 6x base salary |
| Hedging / pledging | Prohibited |
Investment Implications
- High equity leverage and quarterly vesting create ongoing alignment with share price but may also introduce periodic selling capacity as tranches vest; anti-hedging/pledging mitigates misalignment risk .
- Severance terms accelerate all equity upon qualifying termination and keep options exercisable for full terms, reducing retention risk but increasing potential “walk-away” value; no single-trigger payouts and 280G “best net benefits” cutback temper shareholder-unfriendly optics .
- 2024 results reflect deep turnaround conditions (negative TSR, net loss), yet the program paid the CEO’s AIP at target based on operational stabilization goals rather than financial outcomes; forward alignment will hinge on the Compensation Committee’s stated plan to re-anchor incentives to specific financial and strategic goals .
- Dual Chair/CEO structure is balanced by a strong Lead Independent Director with defined authorities; continued governance discipline and transparent pay design will be key to sustaining say‑on‑pay support amid ongoing restructuring .