As a shareholder in Bank of America
Here at The Motley Fool we firmly believe that the management of publicly traded companies, whether big or small, works for their shareholders. As a shareholder, I'm disgusted by the admission yesterday that Brian Moynihan took home more than 6 times the compensation that he received in 2010. Bank of America's justification for the pay increase was almost as ridiculous as the events that surrounded it.
The reasoning behind the boost in Moynihan's compensation package to $7.5 million from $1.2 million was interpreted by The Washington Post as "[j]ustified because the bank turned a profit after losing money in 2010, and because it ended the year with a stronger balance sheet."
You read that correctly: "after turning a profit." The company made $0.01 in 2011 ... one penny per share! As for the stronger balance sheet, this comes only after Bank of America sold its stakes in China Construction Bank for $8 billion, credit card assets to Toronto-Dominion Bank for $7.6 billion, and the Pizza Hut franchise for approximately $400 million. Bank of America has been fire-selling its assets to better its capital position, and it is working. This does not, however, justify a fivefold pay increase.
But don't think I'm anywhere near done. Last week, I set my discerning eyes on Citigroup's
Last year was also one where Bank of America was surpassed in total assets by JPMorgan Chase
I wish I could say I was done, but I'm not! Did you know that Bank of America, in relation to mortgage and foreclosure-related lawsuits, paid out $14 billion in settlements in 2011? Did I mention that Bank of America's stock lost 58% of its value last year? Forget that it's nearly doubled off its lows set in December -- it still has a long way to go before it gets back to where it began 2010.
Let me be clear that I believe in Bank of America's business model and I understand the need to reduce costs to facilitate profits and do what's best for shareholder interests -- but increasing Moynihan's pay by more than 500% is a gross misuse of company funds when it should be in cost-reduction mode.
For shame, Moynihan, for shame!
Sean Williams (TMFUltraLong)
Bank of America shareholder
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Fool contributor Sean Williams owns shares of Bank of America but has no material interest in any other companies mentioned in this article. He is unafraid to point out what he feels are gross misrepresentations of shareholder interests. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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