BofA owes Ken Lewis $68.8 million on his way out the door
Ken Lewis, who is quitting as Bank of America Corp.’s chief executive at year's end, is headed for an extremely comfortable retirement even though he won’t enjoy one of the special golden parachutes that some corporate bosses collect on the way out the door.
After 40 years working for BofA and predecessor companies, the 62-year-old executive has accumulated quite an array of personal assets. Topping the list is a lump-sum pension benefit that was valued at $53.2 million in the bank’s last public report on his holdings.
That report, in a proxy filing this year, also said Lewis had $10.6 million in deferred compensation coming his way. And he will keep 305,000 shares of restricted stock that will vest over the next few years, which, at Friday's stock price of $16.34 are worth about $5 million.
Total take: $68.8 million.
And that’s just the latest bag of booty for Lewis, who has been under fire since his agreement last year to acquire Merrill Lynch & Co. resulted in BofA's receiving a $20-billion, second infusion of federal bailout funds.
Over the years, Lewis has accumulated 3.4 million shares of BofA stock -- now worth about $55 million -- via restricted stock grants, the exercising of stock options and purchases in the open market.
Lewis, like all longtime BofA shareholders, has reason to regret hanging on to many of the shares: A year ago, the stock was cruising along at above $50 a share. It plunged to as low as $3.14 back in March, when it looked as though the bank and other financial giants might melt down, before rebounding to nearly $18 by the end of August.
The most disappointing of Lewis’ holdings have to be his remaining 2-million-odd stock options, which were granted in the $40-to-$50 range, said David M. Schmidt, a senior consultant at executive compensation firm James F. Reda & Associates.
They currently are “way underwater,” Schmidt said. “The stock price would have to triple for them to be worth anything.”
Is Lewis’ compensation likely to come under attack by Kenneth Feinberg, the "pay czar" tapped by President Obama to evaluate and approve compensation at bailed-out corporate mammoths including Citigroup Inc., American International Group Inc. and, yes, BofA?
Feinberg couldn't be reached for comment Friday. But it seems unlikely he would go after Lewis, because the various awards to the BofA boss were made before the meltdown and the bank's total $45-billion U.S. bailout.
And although the public may object to the rich compensation packages that bank executives have been granted over the years, Schmidt said there was nothing unusual about any of the pieces of Lewis’ exit package -- except perhaps the restricted stock grant. Restricted stock, which can’t be sold immediately, usually lapses if an executive quits a company before the shares vest or become salable. But BofA lets its executives hold on to the restricted stock if they leave the company at age 60 or older.
What’s more, Lewis has voluntarily worked without a contract since 2003, and so had no special exit package -- just the enormous benefits his board deemed business as usual for someone leading a goliath on the banking scene.
-- E. Scott Reckard
Photo: Ken Lewis. Credit: Bebeto Matthews / Associated Press