Bank of America Said to Pay Bankers Average Bonus of $400,000

Discussion in 'Economics' started by S2007S, Feb 3, 2010.

  1. S2007S

    S2007S

    Biggest credit crisis in history and bank of america is able to hand out $4.4 Billion in bonuses, amazes me to see what is going on, these banks were on the verge of collapsing and here they are today handing out TENS of billions of dollars in bonuses, imagine if the economy had a 4% unemployment rate, 7% GDP growth, and the bull markets intact making tons of money for investors, I think they would hand out bonuses of $50 Billion+ ....

    If they can hand out bonuses this high during the deepest recession in history, when this economy does turn just a tad better bonuses for everyone in that industry will surge thousands of percent.



    Bank of America Said to Pay Bankers Average Bonus of $400,000


    By David Mildenberg

    Feb. 3 (Bloomberg) -- Bank of America Corp., the nation’s largest lender, will pay investment-banking employees bonuses of about $4.4 billion for last year, or an average of $400,000 each, a person close to the bank said.

    As much as 95 percent will be paid in stock vesting over about three years, the person said. Those receiving the smallest bonuses will get about half their compensation in cash, paid later this month, the person said. The unit accounts for 10,000 people, or 4 percent of the bank’s 283,000 workers.

    Bank of America, the target of political wrath for its acquisition of Merrill Lynch & Co. even as the faltering Wall Street firm handed out $3.6 billion of employee bonuses, reaped a $6.3 billion profit in 2009. This year’s investment bank bonuses are a third less than $6.5 billion that the combined units would have paid in the peak year of 2006, the person said, citing internal Bank of America calculations.

    “Those numbers sound like the kind of numbers we’d expect to be hearing from Wall Street firms,” said Steven Hall, managing director of New York-based Steven Hall & Partners, an executive compensation consulting firm.

    The Financial Times cited unidentified people as saying that top Bank of America performers in global banking and markets will receive bonuses of about $5 million, while managing directors will get $2.5 million to $3 million.

    Goldman Sachs, JPMorgan

    “We attempted to balance the need to pay competitively with our understanding of the general concern over the level of compensation on Wall Street,” spokesman Robert Stickler said. “The most important thing is that much more of year-end compensation is now deferred and tied to long-term stock performance and there are clawbacks.”

    Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co.’s investment bank slashed their compensation in the fourth quarter. The three firms set aside $39.9 billion for pay in 2009, below the 2007 record of $44.7 billion. The total fell short of the $46.1 billion five analysts expected this year and is almost $10 billion less than what some analysts estimated in October.

    JPMorgan’s investment bank had the lowest ratio of the three of total pay to revenue, at 33 percent. Goldman Sachs’s rate was 36 percent and it was 62 percent at Morgan Stanley. Bank of America’s bonus figures equate to about 19 percent of the investment bank’s $23 billion in revenue.

    Moynihan’s Salary Bumped

    At Bank of America, based in Charlotte, North Carolina, the bonuses equate to 19 percent of revenue at the investment bank. That ratio would have been 26 percent in 2006, the person briefed on the matter said.

    Separately, Bank of America said in a regulatory filing that it raised the base salary of new Chief Executive Officer Brian Moynihan to $950,000 this year from $800,000 in 2009. The bank also boosted the salaries of Joe Price, head of consumer, small business and card banking, and Barbara Desoer, head of home loans and insurance, to $800,000 from $500,000.

    Details on the executives’ 2009 compensation will be reported in the bank’s annual proxy statements.

    Twenty-eight Bank of America employees and 149 Merrill employees received bonuses of at least $3 million for 2008, according to a report last year by New York Attorney General Andrew Cuomo. Those 149 Merrill employees received a combined $858 million, an average of $5.8 million, the report said.

    Bank of America in December repaid $45 billion in federal bank-rescue aid, freeing the company from restrictions on compensation.
     
  2. TGregg

    TGregg

    Most people think of bonuses as an extra, unexpected gift and that's how it works in many places. They think of it like a unexpected Christmas present. But that's not how it works in finance. Some (most?) jobs in finance have a bonus as part of the compensation package. If you start mid year, your offer letter frequently spells out a minimum bonus as a dollar amount - it says someething like "you will receive a bonus of at least $xxxxxx". The total amount is not set in stone, but there is rough expectations as part of your compensation. Frequently it is expressed as a percentage of your salary and can run from a measly 10% to 100% of your base. I've even seen nonmanagers get bonus targets of 150% of their base.

    If some IB decided to stop bonuses and didn't substantially raise salaries, everybody that could get a job someplace else would. Just like if someplace cut salaries in half. It's a fundemental, negotiated part of their comp, not some present handed out by greedy suits.
     
  3. Katie Couric Gets Some of Her Own Class Warfare Medicine for $14m Salary
    By Lachlan Markay
    Wed, 02/03/2010

    Katie Couric may be getting a taste of her own populist medicine. When the Dow hit 10,000 last October, she (and other network news personalities) used the opportunity to bemoan massive payments to Wall Street bankers. But now the populist sentiment has turned on her. She faces dramatic pay cuts as CBS News downsizes.

    Couric, shown in a, er, file photo at right, "makes enough to pay 200 news reporters $75,000 a year! It's complete insanity," one CBS News insider told the Drudge Report. "We report with great enthusiasm how much bankers are making, how it is out of step with reality during a recession. Well look at Katie!"

    The employee was referring to Couric's roughly $14 million annual salary, the highest in network news. That salary may be cut dramatically in the face of massive layoffs at CBS News branches in Washington, San Francisco, Miami, London, Los Angeles and Moscow.

    CBS News has been one of the most outspoken networks against massive Wall Street bonuses and executive payments. The "Early Show" hosted economist Peter Morici late last year to whine that "it's absolutely unfair for Wall Street to be paying itself record bonuses. The taxpayers made these bonuses possible by loaning Wall Street money at near zero rates. This is all quite unseemly and inappropriate."

    Couric herself has also been critical on occasion. She said last year, "Pick up today's Wall Street Journal and you'll read banks and securities firms are on track to pay their employees record amounts this year. And, you pick up The New York Times and you'll see some workers are being forced to take huge pay cuts."

    Days later, she recounted on Evening News that "Taxpayers all over the country were outraged when they heard that companies they helped bail out turned around and gave their executives huge bonuses."

    Couric probably would have been better off staying away from criticisms of executive bonuses. Her $300,000 per week salary was sure to raise eyebrows in the event of layoffs.

    Maybe as a rule of thumb, multi-millionaires should just avoid inciting class warfare, for their own sake if no one else's.