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BofA's 2011: The Year of Decline
February 20, 2012
[ by Melanie Gretchen ]
Bank of America's cuts have extended across the executive board for 2011, after the bank lost its place as the nation's biggest bank by assets and its shares posted the steepest decline in the Dow Jones Industrial Average.
A Year in Review. In 2011, the bank suffered a blow in the form of the Federal Reserve's rejection of a bank request to raise its dividend, as the CEO had promised to shareholders. Last fall, its announcement of a $5 monthly debit-card purchase fee cost the bank 600,000 customers, according to Javelin Strategy & Research, before BofA withdrew the action.
Instead of a raise on his $950,000 annual salary, CEO Brian Moynihan has had his salary held and won't receive a cash bonus, according to a person familiar with the matter. Following a 58% share-price decline in 2011, he hasn't received any of the $9.05 million in restricted stock he was eligible to earn last year.
This year, Mr. Moynihan, 52, earned $5.9 million in restricted stock for his 2011 bonus - a 35% drop compared to 2010. According to a filing last week, he gets restricted stock units that will vest monthly over the next year. They were worth $1.8 million as of Wednesday, when the award was granted. In addition, he is eligible to earn $4.1 million in restricted units that are tied to the bank’s return on assets.
Thomas Montag, co-COO, was awarded a total of $8.1 million in restricted stock. He was paid just under $1 million in stock that will vest over the course of the year in cash and can earn up to $7.1 million in units tied to the company’s performance. David Darnell, the other co-COO, received up to $4.2 million in shares tied to performance. They, like several executives, will receive some cash bonus, though it will be a relatively small portion of their awards, the person familiar with the matter said.
CFO Bruce Thompson was awarded $792,680 in shares that vest monthly over the next year and $5.4 million in stock tied to the company performance. If earned, those shares won't be eligible to be sold by any of the executives until 2015.
A New Winner. As Bank of America stock continued down past $5, it sold a series of so-called non-core assets to boost its capital position, costing it the top spot by asset size. As of late 2011, J.P. Morgan Chase & Co. reigns supreme.
[WSJ, 2/17/12]
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