Bank of New York Chief Kelly’s Compensation Climbed 38% in 2010

Robert Kelly, chief executive officer of Bank of New York Mellon Corp., the world’s biggest custody bank, earned $19.4 million last year, a 38 percent increase from the year before.

Kelly, 56, received more in stock awards and incentive compensation than he did for 2009, according to a filing released today. His $1 million base salary remained the same.

New York-based BNY Mellon reported net income of $2.5 billion in 2010, compared with a loss in 2009, as stock and bond markets rebounded. Kelly has boosted profits by shifting employment to lower-cost locations and making acquisitions.

Curtis Arledge, hired in August to be head of the bank’s asset-management unit, received $11.8 million, including stock awards worth $8.7 million and a bonus of $3 million. Arledge previously worked at New York-based BlackRock Inc., the world’s largest money manager.

BNY Mellon last year bought BHF Asset Servicing GmbH for 253 million euros ($352 million) to expand in Europe and acquired PNC Financial Service Group Inc.’s investment-servicing business for $2.31 billion. The bank’s revenue growth has been hurt by the U.S. Federal Reserve’s decision to keep its main lending rate near zero since 2008.

BNY Mellon gained 8 percent last year compared with a gain of 12 percent for the Standard & Poor’s 15-company index of asset managers and custody banks.

President Gerald Hassell earned $11.2 million, 75 percent more than he was paid in the previous year. Chief Financial Officer Thomas Gibbons got $6.8 million, a 67 percent increase.

Custody banks earn fees for keeping records, tracking performance and lending securities to institutional investors such as mutual funds, pensions and hedge funds.