Diving overview:
Credit rating agency S&P Global has announced that State Street CFO Eric Aboaf will join the New York-based company as CFO, with his appointment effective February 2025, or “in any event March 25, 2025.” It is expected to come into effect after that. Tuesday’s securities report. Mr. Aboaf, 60, will remain with State Street Corp. until the financial services provider’s annual 10-K filing for fiscal year 2024, according to a filing with the Securities and Exchange Commission. State Street has begun both a formal “internal and external search process” for Mr. Aboaf’s replacement, according to the filing. State Street announced its third-quarter financial results in a separate release Tuesday, reporting total revenue increased 21% to $3.2 billion.
Dive Insight:
The move to S&P Global marks a departure from the banking industry for Mr. Aboaf after a decades-long career in the industry.
Aboaf served as CFO of Boston-based State Street for nearly eight years, and was named CFO and vice chairman in May 2022, according to his LinkedIn profile. Prior to joining State Street, he was CFO at Citizens Inc. and spent 12 years at Citigroup, where he held positions including treasurer and CFO in the bank’s institutional investors group.
The move to S&P Global will come with an increase in Aboaf’s salary, and the incoming CFO will receive an upfront payment of $2.4 million “in consideration of compensation foregone by his current employer,” according to the credits. The rating agency’s Tuesday filing.
As CFO, he will receive an annual base salary of $825,000, according to company filings. He also has a short-term incentive opportunity of $1.8 million and will receive an equity award with a target incentive of $6.5 million in 2025, according to the filing.
As State Street’s CFO, Mr. Aboaf received total compensation of $7.8 million for the full year 2023, according to the bank’s most recent proxy report filed in April. His compensation consisted of a base salary of $700,000, $4.7 million in stock compensation, $2.3 million in non-stock incentives, and $113,910 in other compensation.
S&P Global’s CFO appointment comes after the credit rating agency announced in June that CEO Douglas L. Peterson would step down and be replaced by Martina L. Chan. According to the announcement, Mr. Chan will become CEO and president in early November, while Mr. Peterson will remain with S&P Global as a special advisor until December 31, 2025.
State Street’s CFO “brings extensive experience in financial services having held CFO roles at multiple publicly traded companies,” Cheung said in a statement included in the company’s Tuesday press release. . Aboaf also has a “well-established track record of driving sustainable growth,” which will “help us continue to deliver strong value to our shareholders in line with our strategy.”
Mr. Aboaf’s appointment also comes about a month after S&P Global announced a settlement with the SEC for record-keeping violations, in which the company agreed to pay a $20 million penalty. The settlement follows an industry-wide investigation by the SEC that accused six credit rating agencies, including S&P Global, Moody’s Investors Service and Fitch Ratings, of mishandling electronic communications, CFO Dive said. Previously reported. Along with S&P Global, Moody’s also agreed to pay a $20 million penalty and Fitch agreed to pay $8 million.
The fine was issued during a period of increased enforcement by the SEC, which imposed fines as high as $125 million for record-keeping violations, CFO Dive previously reported. In late September, the SEC separately fined 12 investment advisers, brokerages, and financial services providers totaling $88 million for similar record-keeping deficiencies related to electronic communications.
Aboaf said he had “mixed feelings” about his move from State Street during the company’s third-quarter earnings call on Tuesday, where the company posted a 73% year-over-year increase in net income to $730 million. reported.
His resignation also raised questions about the bank’s future strategy. On the third-quarter earnings call, one analyst noted that the bank had made “meaningful progress” in improving profitability, but given that a new CFO will take the helm next year, such improvements are unlikely to persist. He questioned executives as to whether this was the case.
“We do not expect the new CFO to signal any strategic changes,” CEO Ron O’Hanley said in response to questions. The search for Mr. Aboaf’s successor has already begun, with the company partnering with an executive search firm, but State Street said it is “very confident that the plan we have in place, combined with the four-month transition period,” “There is,” he said. [Aboaf]and the company’s overall performance alone means it will be in good shape for this transition. ”
The increase in earnings was driven by a combination of higher fee income and net income, with the bank reporting fee income of $2.6 billion in the quarter, an 11% increase from the year-ago period.
S&P Global declined to comment beyond the press release. State Street did not respond to a request for comment.
