BofA Bumps CEO Moynihan’s Pay 25% as Citigroup Cuts Corbat'sBy , , and
Bank of America shares climbed most in bank index last year
Citi cuts Corbat’s 2016 compensation 6.1% to $15.5 million
Bank of America Corp. awarded Chief Executive Officer Brian T. Moynihan $20 million for his work last year, raising his compensation 25 percent, while Citigroup Inc. cut CEO Mike Corbat’s by 6.1 percent to $15.5 million.
Moynihan received $18.5 million in stock grants for 2016, according to a regulatory filing Friday, up from the $14.5 million he received for 2015. He hasn’t received a cash bonus since 2007. Corbat’s pay included a $4.2 million cash award and $9.8 million in shares that pay out over years based on performance. Both executives received salaries of $1.5 million.
Moynihan, 57, has worked to boost the lender’s profitability through cost reductions and by resolving legal matters left over from the financial crisis. The bank increased profit by 13 percent to $17.9 billion in 2016, and Moynihan said in April he’d cap expenses at $53 billion by the end of 2018, a $2 billion drop from last year.
Despite dialing back costs, Moynihan didn’t achieve his long-term 60 percent efficiency ratio target in 2016. Bank of America, the second largest U.S. lender, ended the year with a 65 percent ratio of non-interest expense to net income, an improvement from 69 percent in 2015. The firm also hasn’t achieved its 12 percent target for return on tangible common equity, which remained below 10 percent at the end of last year.
Bank of America shares climbed 31 percent in 2016, the most among the largest U.S. deposit-taking lenders. The surge was largely due to a fourth-quarter rally in financial stocks fueled by investor expectations that President Donald Trump’s election would result in less regulation and lower taxes.
Citigroup’s profit fell 14 percent and return on assets failed to meet the 2016 target, leading CLSA Ltd. analyst Mike Mayo to criticize management for missed goals and uncertain targets that prevent investors from being able to hold the company accountable. The stock’s 15 percent gain last year trailed the 26 percent advance of the 24-company KBW Bank Index.
Half of Corbat’s stock award for 2016 will be earned if the bank meets goals for return on tangible common equity and cumulative earnings per share, measured through 2019. The payout is capped at the target number of shares in case the bank’s stock performance over that period is negative. The other half vests over four years subject to performance conditions that weren’t specified in the filing.
The CEOs of other major Wall Street banks saw their 2016 compensation increase. JPMorgan Chase & Co. boosted CEO Jamie Dimon’s target pay by 3.7 percent to $28 million and Morgan Stanley’s James Gorman was awarded $22.5 million, a 7.1 percent increase.
Goldman Sachs Group Inc. hasn’t yet disclosed pay details for Lloyd Blankfein, but the CEO’s package for 2016 could be about $22 million, not counting his long-term incentive, according to a Bloomberg estimate. That would be a decrease from the $23 million he got in 2015.
Wells Fargo & Co. also hasn’t released 2016 executive compensation figures. The firm’s board will probably decide to withhold bonuses from some top executives including CEO Tim Sloan and Chief Financial Officer John Shrewsberry to hold managers accountable in the wake of a scandal involving the opening of bogus accounts, a person with knowledge of the matter said last week. Denying the bonuses isn’t meant to reflect findings of specific wrongdoing, the person said.
Citigroup also disclosed equity awards for other senior executives including President Jamie Forese and consumer chief Stephen Bird, which can be used to calculate total pay for 2016. Forese saw his compensation trimmed by 4.4 percent to $15.3 million, while Bird got a 5.9 percent raise to $9 million, according to the filings and Bloomberg calculations using a previously disclosed formula and salary figures.
Bank of America didn’t disclose complete pay details for Moynihan’s deputies, but Chief Operating Officer Tom Montag got 412,196 shares, half of which are tied to performance, according to a separate Friday filing. They were worth about $9.6 million based on a 10-day price average, which is the measure the bank typically uses according to its proxy. That compares with stock awards valued at $8.7 million for 2015.
Chief Financial Officer Paul Donofrio received shares worth $6.24 million under the same method.
The exact figures and other components of the deputies’ pay will be disclosed later this year when both banks file their proxies.