Bank of America Corp. cut Chief Executive Officer Brian T. Moynihan’s compensation for 2011, granting him no cash bonus and freezing his salary, said a person briefed on the executive’s awards.
The bank is holding Moynihan’s salary at $950,000, said the person, who spoke on condition of anonymity because the Charlotte, North Carolina-based bank hasn’t yet announced his pay package. It gave him $5.9 million in restricted stock units, mostly linked to future performance, the firm said yesterday in a filing. For 2010, the grant had surpassed $9 million.
Bank of America, the second-biggest U.S. lender, plunged 58 percent in New York trading last year as Moynihan sold $33 billion in assets and announced 30,000 job cuts amid stagnant revenue and rising costs from defective mortgages. The stock has climbed 44 percent this year, the best performance in the 30-company Dow Jones Industrial Average, on optimism that the firm will benefit as the U.S. economy improves.
“They’re setting an example from the top, saying, ‘You know what? If the company doesn’t do well, our CEO isn’t going to do as well,’” said Jeanne Branthover, a managing director at Boyden Global Executive Search Ltd. in New York. “Yes, these guys make a lot of money, but they have to wait it out with their deferred equity, like everyone else.”
The bank had agreed to award Moynihan, 52, a $9.05 million restricted-stock bonus last February, according to a regulatory filing the previous month. This year, it gave him 228,302 in stock units that pay out in 12 monthly installments and 532,705 in performance-contingent units that he may receive as early as March 2015 if performance hurdles are met, according to yesterday’s filing. The value is based on the stock’s closing price on the award date, Feb. 15.
Bank of America posted net income of $1.4 billion for 2011, fueled by the divestiture of holdings including a Chinese lender, compared with a $2.2 billion loss the previous year when the firm booked $12.4 billion in impairments.
Co-chief operating officer Thomas K. Montag was awarded stock units totaling $8.1 million, most of which are performance linked awards, according to a filing. David Darnell, the other COO, got stock units valued at $4.2 million. Chief Financial Officer Bruce Thompson’s stock award is valued at $6.2 million.
Unlike Moynihan, the managers will also get cash bonuses, which will be disclosed in a filing next month, the person said.
The company told investment bankers in January to expect compensation that averages 25 percent less than last year, people with knowledge of the plans said then. Moynihan may trim expenses in investment and corporate banking, trading and wealth management by as much as $3 billion after targeting $5 billion in cuts to retail operations.
Morgan Stanley reduced CEO James Gorman’s 2011 pay by 25 percent from a year earlier as JPMorgan Chase & Co. held CEO Jamie Dimon’s steady, said people with knowledge of the plans. Both firms are based in New York.
Dimon may receive $23 million, more than double Gorman’s $10.5 million, said the people, who spoke on condition of anonymity because the total pay amounts aren’t public. Dimon got about $17.3 million in stock and options, while Gorman received $5.1 million of shares, according to Jan. 20 regulatory filings.
Goldman Sachs Group Inc. CEO Lloyd Blankfein saw his restricted stock bonus fall by 44 percent to $7 million for a year in which earnings dropped by 47 percent on a decline in fixed-income trading revenue.
JPMorgan surpassed Bank of America as the largest U.S. lender by assets last year and was the most profitable U.S. bank as net income climbed 9 percent to about $19 billion.
Goldman Sachs fell 46 percent in New York trading last year, while Morgan Stanley declined 44 percent and JPMorgan slipped 22 percent.