< Back to News

Bank of America Expects Record Bonuses for Some Top Performers

Jan. 8 (Bloomberg) — Bank of America Corp., the biggest U.S. lender, expects to pay record bonuses to some investment bankers while keeping the overall cost of incentive compensation below previous years, according to a company spokesman.

“Some people will be getting very good bonuses because they had a very good year,” spokesman Robert Stickler said. The overall pool “will not be a record,” he said.

Bank of America repaid $45 billion in U.S. bank-rescue assistance in December, freeing the Charlotte, North Carolina- based lender from federal pay restrictions. Bonuses paid to Merrill Lynch & Co. executives before Bank of America completed its takeover of the brokerage in January 2009 prompted federal and state probes and a shareholder revolt that stripped Chief Executive Officer Kenneth D. Lewis of the chairman’s title.

Lewis retired on Dec. 31 and was replaced by Brian T. Moynihan. Bank of America’s management is determining the total earmarked for incentive-based compensation, Stickler said. The sum must get approval by the company’s board around the end of January, he said.

The Wall Street Journal reported on Bank of America’s bonus plans in its online edition yesterday. Incentive pay is based on individual, business unit and overall company performance, Stickler said.

Fees from the company’s investment bank and capital markets businesses ranked second in 2009 among Wall Street firms, trailing only New York-based JPMorgan Chase & Co. Moynihan said Jan. 4 the fees reflected the success of the Merrill Lynch takeover.

“Clearly investment banking at Bank of America had a pretty good year, so you’d expect year-end incentives would reflect that,” Stickler said.

Quarterly Results

Later this month, Bank of America as a whole may report its third loss in the past five quarters, amounting to 52 cents a share, according to the average estimate of 17 analysts surveyed by Bloomberg. Defaults on home loans, commercial real estate and credit cards have prompted the bank to charge off more than $25 billion through Sept. 30. Repaying funds to the Troubled Asset Relief Program may have reduced income available to common shareholders by $4.1 billion, the bank said last month.

Merrill reported a $27.6 billion loss in 2008, its last year as an independent company.

Bank of America rose 54 cents, or 3.3 percent, to $16.93 yesterday in New York Stock Exchange composite trading.