Some employee bonuses for 2010 may be paid in stock rather than cash - a move driven more by necessity than by strategy.  It's all tied to the loans BofA received from the U.S. Government.

BofA has a $1.1 billion gap that relates to its agreement, last December, to repay $45 billion of federal bailout funds and thereby escape TARP - Troubled Asset Relief Program.  Part of the deal called on the bank to be contracted to sell $3 billion in assets (reduced from $4bn) by 6/30/10;  that deadline was extended to New Year's Eve, 12/31/10.

The bank said on Friday that to accomplish its goal, it “must raise a commensurate amount of common equity” if asset sales don't bring in the necessary funds. Bank of America raised $1.9 billion so far to meet the commitment, and the gap may be closed by issuing stock to some of its approximately 284,000 employees. [From a quarterly filing]

“They are going to meet their commitment and if they have to, they'll do it through their employees,” said Mark Borges, a compensation consultant at Compensia Inc. in Corte Madera, California.

BofA has set aside $26.3 billion for employee compensation through the first 9 months of the year, compared with $21.6 billion at JPMorgan Chase, and $18.6 billion at Citigroup.  Any new shares issued to employees would immediately vest and could be traded right away, according to the filing. 

This wouldn't be the first time the bank substituted shares for cash. In December 2009, the company said it would issue $1.7 billion in shares to employees instead of year-end bonuses.  For more, click onto:   [ Bloomberg, 11/8 ]