Tags: bank of america | bonus | rise | record

Bank of America Bonuses to Rise, But Not Hit Record

Friday, 08 Jan 2010 05:51 PM

Bank of America Corp. will likely pay some employees at its investment bank at levels significantly above last year, although there will be no record payouts, a spokesman for the bank said on Friday.

Last month, the largest U.S. bank joined others on Wall Street that repaid billions in bailout funds to the government, ending restrictions on top executives' pay.

"We had some units that had very, very good results and the compensation will reflect that," said the spokesman, Robert Stickler.

The bank pays bonuses based on the performance of the individual, his or her business unit and the whole company, he said.

The top payouts will likely be for employees in the capital markets division, which was one of Bank of America's best performing businesses last year, Stickler said.

That unit had total sales and trading revenue of $15.5 billion for the first nine months of 2009, compared with a loss of $1.04 billion a year earlier.

But while compensation broadly will be more than last year, there will not be any record-breaking payouts.

"When you look at the overall pool or the individual payouts, they will not be a record," said Stickler.

"They will be up from last year, but last year was significantly depressed."

This pattern is likely to play out across U.S. banks, said compensation consultant Alan Johnson.

"Many of the firms are going to be up dramatically from 2008," he said, but added that, compared with bonus levels in 2007, "most firms are going to fall short."

Rising bonuses have drawn criticism from politicians and others, who complain that Wall Street's losses seem to be socialized while its profits are privatized.

Regulators and lawmakers have pressed banks to tie compensation to longer-term performance and to pay more in stock.

Bank of America will likely pay banking employees' compensation roughly 75 percent in stock and 25 percent in cash, according to a person briefed on the matter.

This is likely to be in line other Wall Street firms, the source said.

"The big trend is a lot more stock and a lot less cash," agreed Johnson.

Stickler declined comment on the structure of Bank of America's bonuses.

Compensation plans will go to the board for approval at the end of the month and nothing is set until then, he said.

Bank of America came under fire a year ago over bonus payments made to Merrill Lynch & Co. employees before the bank's acquisition of Merrill was completed on Jan. 1, 2009.

The bank took a second cash injection from the government last January after Merrill posted billions in fourth-quarter losses and this brought the bank under additional pay curbs from U.S. pay czar Kenneth Feinberg.

Charlotte, N.C.-based Bank of America has been concerned about losing top executives to rivals that repaid bailout funds in the summer and were never subject to the additional pay restrictions.

The bank had already seen a wave of departures from the former Merrill Lynch investment bank after the acquisition last year and it is anxious to prevent a second-round of departures this year.

But Bank of America is not the only bank struggling to balance retaining staff through competitive bonus payouts without flaming public anger over compensation as U.S. unemployment remains high.

Compensation at U.S. banks broadly has been a hot-button issue since the government handed out billions of dollars in bailout money to shore up banks during the financial crisis.

Banks, including Goldman Sachs Group Inc. and Wells Fargo & Co.,  have been seeking to defuse the outcry over bonuses by announcing proposals to pay top executives entirely in stock for 2009.

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Bank of America Corp. will likely pay some employees at its investment bank at levels significantly above last year, although there will be no record payouts, a spokesman for the bank said on Friday. Last month, the largest U.S. bank joined others on Wall Street that...
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