Is Bank of America Doing Something Right?

On Friday, SEC filings revealed that Bank of America (NYSE: BAC  ) handed CEO Brian Moynihan stock awards worth nearly $6 million. That's a number that might leave a sour taste in some investors' mouths after they watched B of A's stock plummet 58% in 2011.

In fact, looking across the banking world at major competitors like JPMorgan Chase (NYSE: JPM  ) , Citigroup (NYSE: C  ) , and Goldman Sachs (NYSE: GS  ) , it's clear that B of A clearly had the worst year.

Bank of America Corporation Stock Chart

Bank of America Corporation Stock Chart by YCharts

Consider, though, that even after adding in Moynihan's nearly $1 million salary, his pay will still probably pale in comparison with those at other banks whose stocks fell. In 2010, Goldman's Lloyd Blankfein took home $18.6 million in total pay and JPMorgan's Jamie Dimon was paid a cool $23 million. Their compensation for 2011 should be higher if anything, particularly as both got salary raises. (Blankfein's base salary more than tripled!)

And while Citigroup's Vikram Pandit took home just one single dollar in 2010, the board "forced" him to take a $1.75 million salary in 2011 and will consider him for performance awards. And it's not as if others at Citi didn't get paid well. The company's CEO of consumer banking took home more than $10 million in 2010, which is considerably more than the CEO of all of Bank of America.

In addition to the fact that Moynihan's pay is comparatively low, it's also notable that the majority of the stock awards he just received aren't exercisable until at least 2015.

In no universe that I'm familiar with is $7 million or so in pay a bad outcome. But Bank of America has performed poorly as a company -- 2011 profit was 93% below 2006's -- and it's performed poorly as a stock. Perhaps Moynihan's pay should be even lower. Maybe much lower. But the fact that sub-par performance is leading to sub-par pay is at least a start.

The Motley Fool owns shares of Citigroup, Bank of America, and JPMorgan Chase. Motley Fool newsletter services have recommended buying shares of Goldman Sachs. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Fool contributor Matt Koppenheffer owns shares of Bank of America but has no financial interest in any of the other companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter, @KoppTheFool, or on Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.


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  • Report this Comment On February 22, 2012, at 4:17 AM, talan123 wrote:

    Well, considering a Washington Mutual Executive got the same pay for 8 days of work, the general direction is a good one....

  • Report this Comment On February 22, 2012, at 1:04 PM, TheDumbMoney wrote:

    Ugh.

    1) Stock price should be irrelevant to pay, first of all, at least over a one-year period, which is what you are looking at in terms of stock performance.

    2) And also, everyone knows that Moynihan has not been on the job very long, and inherited a mess. Are you really also attempting to tag Moynihan with a comparison of 2011 to 2006 profits (a 93% drop), even though Moynihan did not take over as CEO of BofA until 2010?

    You're better than this, Matt.

  • Report this Comment On February 22, 2012, at 2:01 PM, TMFKopp wrote:

    @dumberthanafool

    I hear where you're coming from, but the fact is that B of A is still dragging butt as compared to the other banks.

    Yes, you're correct that Moynihan inherited the mess, but what should B of A be judging pay on then? That he shows up every day? That he wears very crisp shirts? :)

    I don't think there's any question that if Moynihan successfully rights the B of A ship that he'll be handsomely compensated for it. Not to mention that he'll have countless highly lucrative opportunities anywhere and everywhere else if he can market himself as "the guy that turned around Bank of America."

    So then what? He gets paid well today while the bank is doing poorly and paid well tomorrow if the bank does better?

    It's not perfect, but I like where B of A's head is at.

    But that's just me.

    I do appreciate the comment though, it's a very reasonable counterpoint.

    Matt

    (oh, and as for the stock price, I don't think pay should be judged on that, but high pay seems to rub many investors the wrong way even more so when the does poorly)

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