With executive compensation and annual bonuses the talk of the corporate town in recent months, Bank of America has made its own statement on the matter, with plans to defer its larger bonuses over a three-year period, according to the Financial Times. The bank will issue all bonuses over $50,000 through a three-part payment plan starting in February 2010, according to company sources.
Bank of America, which recently completed a merger with Merrill Lynch that produced the country’s largest bank, is taking flak for the $15 billion losses posted by Merrill in Q4 2008—losses that weren’t reported until after shareholders approved the merger. Merrill paid out $3.6 billion in bonuses for 2008, and recently deposed CEO John Thain had been pushing for even more.
Bank of America will be making huge job cuts—up to 35,000—in the coming year in order to achieve cost savings after the expenses of the Merrill deal. BofA recently landed $20 billion from the federal government’s Troubled Asset Relief Program and further guarantees of up tot $118 billion in assets.
Wall Street paid out a combined $18.4 billion in bonuses in 2008, despite widespread losses throughout the financial sector. Critics have emerged from all sides to condemn such payments, including President Barack Obama, who labeled them “shameful.” Bank of America’s deferred bonus plan appears to be a step towards cooperating with public and legislative criticism.