No executive bonuses for 2008, Bank of America CEO says
This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.
Maybe bankers are beginning to understand something about public rage over the bailout, after all.
Bank of America Corp. Chief Executive Ken Lewis is asking the company’s board not to award bonuses to him or other top executives for 2008, the Charlotte Observer reported today:
Lewis confirmed the decision in an e-mail sent to his eight direct reports this afternoon. A Bank of America spokesman confirmed the authenticity of the e-mail obtained by the Observer. ‘This was a difficult decision because we have worked hard and made progress on many projects that will create value for our company in future years,’ Lewis said in the e-mail, citing acquisitions of Countrywide Financial and Merrill Lynch as well as a successful LaSalle Bank integration. ‘Nonetheless, we are a pay-for-performance company.’
Bank of America’s stock plummeted 66% last year, after a 22% decline in 2007. With loan losses mounting, the company in October slashed its dividend payout 50%, a blow to many shareholders who have relied on the stock for income. The shares closed today at $14.28, up 30 cents.
‘It is only fair that our most senior executives, who have been rewarded in past years when our company and stock price performed, should now share in the pain as performance has lagged,’ Lewis said in the e-mail.
Bank of America got a total of $25 billion from the government as part of the Treasury’s $700-billion plan to bolster banks’ capital with the aim of encouraging more lending. The investment is in the form of preferred stock that the government expects will be repaid in time.
Executives at some other banks also have declined bonuses for 2008, including Citigroup CEO Vikram Pandit and Chairman Win Bischoff, and Goldman Sachs Group CEO Lloyd Blankfein.
But in another case that got a lot of unwanted publicity, a former Merrill Lynch executive left the firm last month with a $25-million golden parachute after Bank of America completed its purchase of the brokerage.
The executive, Peter Kraus, had been with Merrill only three months before the Bank of America deal triggered his payout. Kraus made news last week when he plunked down $37 million for a Park Avenue apartment.
-- Tom Petruno