CEO Has Extra Incentive to Keep BofI Federal Bank Profiting

Greg Garrabrants, CEO of BofI Federal Bank, is betting his company's stock price will rise annually for the foreseeable future.

He recently signed a five-year contract with the bank, which he has led since 2007, increasing his salary from $375,000 to $700,000 annually and tying his annual grant of restricted stock units to the company's market capitalization. Companies measure market cap by multiplying the number of shares held by investors by the price of a share.

Share price for La Jolla-based BofI Holding Inc., Bofl's parent company, closed at nearly $28 per share on July 31, the highest price since March of this year, rising 4.34 percent from market opening.

In comparison, a composite stock index, ABA Community Bank Nasdaq Index (ABAQ), rose about half a percentage point. The size of Garrabrants' restricted stock grant, under the recently amended employment agreement, which went into effect June 30, will also be affected by how its stock performance measures up to that composite index.

BofI's rising stock price follows the company's earnings announcement on July 27, which revealed the La Jolla-based bank had earned $32.5 million in the three months ending June 30, the...