Bank of America Corp.
Summary:
All in all, the Bank's compensation program looks like a big ship with a lot of momentum. Corporate losses may whip the seas up a bit, but executive rewards are moving ahead "steady as she goes". Hopefully not a model for other publicly traded companies to follow.
Analysis:
The entire banking sector has struggled in 2007, and into 2008. Stock prices are hitting lows not seen in years, while the losses continue to pile up. The banks that rely heavily on the domestic market are struggling to make ends meet.
Bank of America is a very large bank that relies primarily on domestic accounts, making them highly susceptible to a slumping economy. It's a tough time to be a banker. Defaults are skyrocketing, investors are squeamish, the government is looking over your shoulder, and it's almost impossible to make any money… unless, of course, you're a senior executive at Bank of America. Then it's Happy Days Are Here Again!
So… What Are They Paid?
OK, the CEO's total compensation was only $25 million, but this was a BAD year! Average cash bonuses were 2/3 of the maximum available; is it ever possible to get NO bonus, maybe now when shareholder value is going down and appears to be starting a freefall dive? The CEO received $4.25 million while the NEOs averaged $2.2 million.
Further, stock awards generally went up $1 million each for senior executives. The amount given out was very high. The CEO received over $11 million in stock awards while the NEOs averaged $4.4 million. That puts them in the top 1/3 for stock award compensation received among DOW Jones Industrial companies – again, in a BAD year!
What's the Board of Directors thinking? Maybe about keeping their own $250,000 per year jobs intact?
The good news is that there are no special payments to executives if the company is sold, although stock vests in the event of a sale or termination, which is fairly common. What's not is that a sizeable portion of the options vest even in the event an executive resigns.
The best way to work at Bank of America is to start young and stay a while. After 38 years the President's retirement has a current value of over $50 million. Others are well into eight figures. Some of the more flagrant aspects of the retirement plan have been corrected, but the stockholders are still financing some very well-gilded "golden years".
Compensation Details:
| CEO | NEO Avg. | |
|---|---|---|
| Base Salary | $1,500,000 | $783,772 |
| Bonus | $0 | $0 |
| Stock | $11,065,798 | $4,403,409 |
| Options | $4,573,585 | $2,065,291 |
| non-Equity Incentives | $4,250,000 | $2,166,000 |
Reference Links:
(1) Annual
Proxy Statement
(2) Annual
Report