(Adds comment from spokeswoman, details on say-on-pay vote and LPL's closing stock price))
By Jed Horowitz
NEW YORK, March 12 (Reuters) - LPL Financial Holdings , one of the fastest-growing U.S. broker-dealers, has terminated employment agreements for its top executives but sweetened some of their benefits and paid two of them $500,000 apiece for giving up the contracts.
The disclosures were made in a regulatory filing on Wednesday that also reported a 32 percent jump in compensation to $6.14 million for longtime LPL Chairman and Chief Executive Mark Casady and a 21 percent hike to $3.12 million for President Robert Moore in 2013.
LPL's decision to eliminate employment contracts for Casady, Moore and Chief Financial Officer Dan Arnold as of Feb. 24 had nothing to do with executive performance but was meant to align the firm "more closely with market practices" and eliminate compensation discrepancies with other executives, the proxy statement said.
For agreeing to undo their contracts, Arnold and Moore were each granted a special restricted stock grant valued at $500,000, according to the proxy.
The moves come as so-called independent broker-dealers such as LPL have been growing at breakneck speed even as they stumbled in supervising sales and compliance procedures.
The Financial Industry Regulatory Authority last May imposed $9 million in fines and customer restitution against LPL for pervasive technology lapses that prevented it from monitoring the emails of the almost 14,000 brokers who buy compliance, marketing and product services from the company.
On Wednesday, FINRA fined two other independent firms that compete with LPL - Triad Advisors and Securities America - $650,000 and $625,000 respectively for failing to supervise brokers who gave inaccurate account statements to customers.
LPL and the two firms settled without admitting the allegations, and LPL has since upgraded its technology and centralized compliance oversight for many of the single-office advisers who use its services.
The board of directors has not held the problems against Casady. In the preliminary proxy filing, the compensation committee said he had exceeded his performance target "as the company continues to transform its operating model and related expenses." LPL's adjusted earnings of $259 million last year were above its $250 million plan as advisers maintained productivity levels while expenses were kept in check, it said.
SEVERANCE SWEETENED
An LPL spokeswoman said the 53-year-old Casady, who has been with LPL since 2003, did not receive the same stock grants as Arnold and Moore for releasing the company from its obligations under the employment contract because each executive employment agreement had different provisions. Last month, however, Casady received $3.1 million of new stock options that vest over three years as a performance bonus, down from the five-year vesting period LPL used to require for such bonuses.