Richard Raffetto
Senior Executive Vice President and President of Commercial and Private Banking at FLAGSTAR BANK, NATIONAL ASSOCIATION
Executive
About Richard Raffetto
Richard Raffetto (age 56) is Senior Executive Vice President and President of Commercial & Private Banking at Flagstar Financial, Inc. (FLG), joining in July 2024 to lead all commercial, corporate, and private banking activities after more than 30 years in banking, including executive roles at City National Bank, U.S. Bank, and BNY Mellon . He holds an MBA in Finance from NYU Stern and a BS in Finance from Wharton . His tenure began amid a turnaround: FLG reported a 2024 net loss of $1,118 million, but strengthened capital (CET1 11.83%) and ended 2024 with $29.9 billion of liquidity; management targeted profitability by late 2025/2026 . In September 2025 remarks, Raffetto highlighted pruning low-ROE C&I exposures, preparing for net C&I loan growth, leveraging ~$21 billion of commercial/private deposits, and expanding fee/product capabilities (FX, swaps, TM, cards, wealth), including an interest-only mortgage offering for HNW clients .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| City National Bank (RBC subsidiary) | President and Director | 2020–2024 | Led commercial lines, products (leasing, treasury management, commercial cards, capital markets); senior leadership of U.S. commercial/private banking franchise . |
| U.S. Bank | EVP, Commercial & Corporate Banking | ~13 years | Senior leadership across commercial/corporate banking, building national C&I platform . |
| BNY Mellon | Corporate Banking Client Management | ~14 years | Relationship and client management in corporate banking; large corporate coverage experience . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| City National Bank | Director | 2020–2024 | Director of U.S. commercial/private banking subsidiary of RBC while serving as President . |
Fixed Compensation
| Component | 2024 | Notes |
|---|---|---|
| Base salary rate | $700,000 | Senior executive base levels set at $700,000 for CEO direct reports in 2024 . |
| Salary paid (2024) | $258,462 | Partial-year cash salary after joining in July 2024 . |
| Signing bonus | $900,000 | Paid on commencement; subject to clawback if leaving before 1st anniversary . |
Performance Compensation
Annual Incentive Plan (AIP) – 2024
| Metric category | Weighting | Target | Actual | Payout | Vesting |
|---|---|---|---|---|---|
| Financial (forecast, budgeting, expense reduction, capital/liquidity) | N/A (scorecard) | Stabilize and execute turnaround | Achieved significant actions on expense reductions; improved capital/liquidity | Overall AIP set at 100% of target | Cash (annual) . |
| Compliance, risk management and controls | N/A | Strengthen risk and control infrastructure | New risk framework; key hires; comprehensive portfolio review | Included in 100% payout | Cash (annual) . |
| Talent, leadership and culture | N/A | Build team and culture | Extensive hiring; integrated HR systems; robust internal/external communications | Included in 100% payout | Cash (annual) . |
| Strategy, technology and innovation | N/A | Execute diversified regional bank strategy; tech foundation | Divested non-core mortgage assets; CRE de-risking; IT/cyber/BCP initiatives | Included in 100% payout | Cash (annual) . |
| Target bonus | — | $700,000 | — | $700,000 | Paid for 2024 . |
Notes: 2024 AIP used operational/strategic scorecard due to turnaround; Committee capped outcome at 100% despite broader achievements given 2024 financial results .
Equity Awards (2024)
| Award type | Grant date | # of securities | Exercise/Grant price | Grant date fair value | Vesting schedule | Expiration |
|---|---|---|---|---|---|---|
| Stock options (inducement) | Jul 29, 2024 | 1,000,000 | $10.48 | $4,560,000 | Equal annual installments over 3 years | Jul 29, 2031 . |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total beneficial ownership | 1,123 shares (held via the Flagstar Financial, Inc. 401(k) plan); 0.000% of class as of record date . |
| Options outstanding (12/31/24) | 1,000,000 unexercisable options @ $10.48 expiring 7/29/31; none exercisable as of year-end . |
| In-the-money status (12/31/24) | Options were out-of-the-money as of 12/31/24 (Company cited $9.33 stock close in related benefit calc context) . |
| Ownership guidelines | Senior executives must hold 4x base salary within 5 years; NEOs in compliance or within the 5-year period . |
| Hedging/pledging | Prohibited for officers/directors (anti-hedging and anti-pledging policies) . |
| Clawback | NYSE/SEC-compliant incentive compensation recoupment policy in place . |
Employment Terms
| Term | Key economics/terms |
|---|---|
| Position | Senior EVP and President of Commercial & Private Banking . |
| Effective dates | Employment effective July 29, 2024 (per agreement exhibit); employment agreement executed July 1, 2025 . |
| Base salary / Target bonus | $700,000 base; $700,000 target annual cash bonus . |
| Long-term incentives eligibility | Eligible to participate in annual LTI beginning in the fourth calendar year of employment (i.e., following initial inducement grant) at the Company’s discretion . |
| Severance (no cause / good reason) | Lump sum equal to base salary + target bonus that would have been paid from termination date until the third anniversary of the agreement’s effective date, plus continued healthcare benefits; accrued benefits always paid . |
| Restrictive covenants | 12-month non-solicitation (customers/employees), 6-month non-compete, perpetual confidentiality, mutual non-disparagement . |
| Relocation | Payment of relocation costs/expenses to NYC metro area per agreement . |
Performance & Track Record (recent)
- C&I portfolio strategy: Intentionally pruned low-ROE and outsized exposures; slowing C&I loan declines and preparing for net loan growth inflection .
- Relationship-led growth: Building from ~$21B commercial/private deposits with primacy; ramping bilateral and selective multi-bank relationships .
- Fee/product build-out: Scaling interest rate swaps, FX, treasury services, commercial card, capital markets, and private banking/wealth capabilities; launched an interest-only mortgage tailored for HNW clients to fill market gap .
Compensation Structure Analysis
- Mix and risk: 2024 package combined a one-time $4.56M options grant vesting over 3 years with a $700k target annual cash incentive tied to operational scorecard, aligning medium-term upside to execution while providing near-term retention .
- Pay-for-performance posture: 2024 AIP paid at 100% of target for operational progress despite a reported 2024 net loss, reflecting turnaround priorities over financial metrics in the year; Committee constrained payout at target .
- Ownership alignment: Current share ownership is de minimis (1,123 shares; 0.000%), but substantial unvested options and 4x-salary ownership guideline create forward alignment; hedging/pledging prohibited .
- Severance economics: Agreement provides a sizable lump sum if terminated without cause/for good reason before the third anniversary, offering retention but creating a potential cost in early transitions .
Risk Indicators & Red Flags
- Low current ownership: Minimal owned shares (0.000%) could dilute alignment until guideline compliance is achieved; mitigated by unvested options and 4x-salary guideline with a 5-year window .
- AIP design in 2024: Operational scorecard (vs. hard financial metrics) paid at target during a loss year—appropriate for stabilization but should evolve to financial goals in subsequent years per Committee’s stated intent .
- Potential vesting-related selling pressure: Option tranches vest annually over three years from grant; monitor Form 4 filings around annual anniversaries post-July 2025 .
Say-on-Pay & Shareholder Feedback (context)
- Majority support on 2024 say-on-pay; Committee revamped program post-recapitalization to better align with long-term shareholder interests, including heavy use of equity and robust governance policies .
Equity Ownership & Vesting Detail (as of 12/31/24)
| Metric | Amount | Notes |
|---|---|---|
| Shares owned (beneficial) | 1,123 | Held via 401(k); 0.000% of class . |
| Options – exercisable | 0 | As of 12/31/24 . |
| Options – unexercisable | 1,000,000 @ $10.48 | Grant 7/29/24; annual vest over 3 years; expire 7/29/31 . |
| In-the-money value | $0 (out-of-the-money at 12/31/24) | Company notes out-of-the-money status at year-end . |
| Ownership guideline | 4x base salary within 5 years | Applies to NEOs; in compliance or within window . |
| Pledging/Hedging | Prohibited | Company policy . |
Investment Implications
- Near/medium-term alignment: A three-year, option-heavy package ties Raffetto’s upside to share recovery and execution in C&I growth, fee ramp, and private banking build-out, with vesting cadence through 2027 creating a retention tether .
- Watch catalysts and signals: Monitor operational KPIs tied to his remit (net C&I loan growth inflection, deposit primacy, fee revenue traction) and Form 4 activity around annual vesting anniversaries starting July 2025 for potential supply pressure .
- Governance guardrails: Strong anti-hedging/pledging and recoupment policies plus stock ownership guidelines are positives for alignment; current low share ownership should trend toward guideline over the compliance window .
- Severance/retention: The severance formula before the third anniversary materially lowers near-term departure risk but could increase change risk cost if leadership reshuffles occur early in the term .