BofA says bonuses will rise, but no record payouts

In December the largest US bank joined others on Wall Street that repaid billions in bailout funds to the government, ending restrictions on top executives’ pay.

“We had some units that had very, very good results and the compensation will reflect that,” said the spokesman, Robert Stickler. The bank pays bonuses based on the performance of the individual, his or her business unit and the whole company, he said.

The top payouts will likely be for employees in the capital markets division, which was one of Bank of America’s best performing businesses last year, Stickler said.

That unit had total sales and trading revenue of $15.5bn for the first nine months of 2009, compared with a loss of $1.04bn a year earlier.

But while compensation broadly will be more than last year, there will not be any record-breaking payouts.

“When you look at the overall pool or the individual payouts, they will not be a record,” said Stickler. “They will be up from last year, but last year was significantly depressed.”

Structure
Rising bonuses have drawn criticism from politicians and others, who complain that Wall Street’s losses seem to be socialised while its profits are privatised.

Regulators and lawmakers have pressed banks to tie compensation to longer-term performance and to pay more in stock.

Bank of America will likely pay banking employees’ compensation roughly 75 percent in stock and 25 percent in cash, according to a person briefed on the matter. This is likely to be in line with other Wall Street firms, the source said.

Stickler declined comment on the structure of Bank of America’s bonuses. Compensation plans will go to the board for approval and nothing is set until it is finalised, he said.

Bank of America came under fire a year ago over bonus payments made to Merrill Lynch & Co employees before the bank’s acquisition of Merrill was completed on January 1, 2009.

Compensation at US banks has been a hot-button issue since the government handed out billions of dollars in bailout money to shore up banks during the financial crisis.

Banks including Goldman Sachs Group and Wells Fargo & Co have been seeking to defuse the outcry over bonuses by announcing proposals to pay top executives entirely in stock for 2009.