BofA Plans Raises for Investment Bankers
Bank of America, which has received $45 billion in government aid, plans to give some investment bankers raises of as much as 70 percent as soon as next month.
Bloomberg News says the Charlotte-based bank may increase the annual base pay for some managing directors to about $300,000 from $180,000. Salaries for less-senior directors would climb to about $250,000 from $150,000, and vice presidents would get $200,000, up from about $125,000.
In a memo, Brian Moynihan, BofA's president of investment banking and wealth management, said fixed base salaries would make up a larger percentage of total compensation and bonuses would become a smaller part. Overall, total compensation would not rise.
The adjustments are designed in part to align the salaries of BofA and Merrill Lynch workers, Bloomberg says. Compensation for traders and others outside the investment bank may also be adjusted.
Given the recent outrage over bonuses at AIG, including legislation to heavily tax payouts at firms receiving help from the federal government, BofA may have had little choice but to change its compensation practices. In his memo, Moynihan argued other banks will follow suit.
"In view of the public concerns about executive compensation, changes in the market and the need to create a more sustainable compensation culture, all the major financial institutions are evaluating compensation practices," he wrote.