What's behind BofA Merrill's early vesting stock payments?

So much for receiving most of your bonus in stock deferred over a three year period.

Financial News reported yesterday that BofA Merrill is paying a proportion of this year's bonus in stock which vests as early as this summer.

The bank isn't commenting on its payment arrangements, but senior headhunters confirm this to be the case, with MD-level BofA Merrill bankers expected to receive

the early vesting component.

"We think it might be a mechanism for getting around the FSA's ruling that only a certain amount of cash can be delivered this year," said one.

Under the FSA's proposed remuneration code, bonuses for bankers earning more than 1m must be deferred over three years. However, the FSA doesn't say anything about when the first tranche of stock can vest.

Graham Muir, a partner at law firm Nabarro, says the move would appear to sidestep the FSA's proposal on deferrals. However, he says it would "certainly still be caught" by the bonus tax.