According to a recent report, Bank of America’s CEO Brian Moynihan got 23% pay hike in 2015 in a bank’s bid to match executive pay with its overall performance. Apparently, the institution has managed to solve most of its mortgage problems, which was reflected in higher profits.
The report also shows that Moynihan gets $16 million every year, of which only $1.5 million is a cash salary, while the rest is comprised of stock awards that can be higher depending on the bank’s overall performance. In the pay package, there isn’t any cash bonus.
Two years ago, when the big bank leaked billions of dollars in an attempt to reach a series of settlements with the federal government, after investigators found that the bank had sold compromised mortgage securities to its clients, Moynihan got just $13 million.
Last year’s pay rise was approved by The Bank of America board, which argued that the financial mammoth had better than expected results including a $16 billion profit, which is a substantial progress from the $4.8 billion profit in 2014.
But 2015 was not an easy one for Moynihan. He narrowly escaped an orchestration set in place by some investors to remove him from his seat.
The company announced the executive pay rise in a securities filling Feb. 12. The bank argued that the ‘continued progress’ observed throughout the year was due to a series of steps to simplify the business. Plus, capital levels were also hiked.
Nevertheless, the big progress was mainly due to efforts by the bank to put problems generated by the 2008 financial crisis behind. As a result, shareholders gained more trust in the institution and were less punitive on its shares when the market had its struggles.
While the market suffered a series of shocks, Bank of America’s stock plunged 29 percent since the start of the year. Analysts explained that big banks’ stock is now more sensitive to market fluctuations than the rest of the stock.
Though, Moynihan’s pay hike may seem huge, this doesn’t mean that Bank of America’s chairman currently receives some of the largest compensations on Wall Street. For instance, JPMorgan Chase’s Jamie Dimon got a $27 million annual pay package after a 35 percent pay rise in 2015.
Furthermore, Goldman Sachs’s Lloyd C. Blankfein’s pay currently amounts to $23 million even though the bank reduced his pay for the first time in the last five years.
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