BofA Plans Raises for Investment Bankers

30 March 2009

2 minute read

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.

AUTHORJonathan Berr

Insider Comment

4 comments

Jo
Jon Jacobs
2 April 2009
So, haroldjh, from the tone of your remarks I gather that you (as a banker and bank consultant) would happily work for BofA as an employee at the current salary levels quoted in the story, with little prospect (given conditions in the company and industry) of getting any bonus this year.
Which is to say, you would feel motivated by a total 2009 comp of $125,000 (if your prior track record aligned with the vice president level)...or $180,000 if you qualified to come in at the MD level....am I interpreting you correctly?
If you reply, "No" - then please explain how you as a shareholder expect to recover any value from a company staffed largely by individuals who you believe would NOT be well motivated to perform at their best level (which is what your own answer of "No" would imply). --Jon Jacobs, eFinancialCareers News staff
Reply
ha
haroldjh
2 April 2009
As a stockholder, a banker, and bank consultant, I think that BofA is making all the wrong moves. For all practical purposes BofA has eliminated their common stock dividend., but it appears that they can givve raises to a select group of employees. Apparently the company is still losing money, BofA appears to have cut a bad deal in the purchase of Merrill Lynch,, and to make it worst they lied to the stockholder in their proxy. From a person who works with problem community banks that Management which would include the directorate that would legal obligations to all the stockholders. I think that this will or should be addressed.in NY, but it should have been addressed at a Federal level, SEC, Feeral Reserve, Attorney General, etc. Wall Street bonus system has been in never never land for may years. This should be a wake up call to get the financial insitutions in the real world, but some people do not work in the real world.
Reply
rh
rhdsouza
1 April 2009
And the market adjusts to the uncertainty of Government policy.
I predict that the next step from this Administration/Congress is legislation governing salaries in the US. Something like a cap in term of the multiple over the average union wages, or a minimum 'bonus' for all irrespective of profitability. Unfortunately, I have seen this movie before. The ending is bleak and a stagnant economy.
My only question is why would anybody want to be associated with a organization that is straitjacked by the bailout? One would need a cast iron stomach to put up with the likes of Dodd, Schumer, Barney, Grassley and the rest Congress.
Reply
Re
Regina Phalange
1 April 2009
Does BofA think the working stiffs in this country are so stupid that they would accept these compensation increases just because they're not being paid out in the form of bonuses? The fact remains that BofA received billions of dollars in aid and they should be "cutting costs", not increasing their executives' compensation. How about paying back the taxpayers that are bearing the brunt of all these dollars being doled out to greedy banks and corporations?!
Reply