NEW YORK - Bank of America Corp., the US lender seeking to preserve capital, will freeze base salary levels and limit cash bonuses to $150,000 for some investment bankers, said two people with knowledge of the plans.
The cap on cash payments applies to those getting up to $1 million in total year-end bonuses, with the rest coming in shares of the Charlotte, N.C.-based lender, said the people, who asked for anonymity because the matter is private. Employees were being told of their payments yesterday and can sell some of the stock starting Feb. 15, the people said.
Wall Street firms are getting bolder in curbing pay and shifting compensation methods as firms move to limit expenses. Bank of America chief executive Brian T. Moynihan, 52, has said he may target up to $3 billion in cost cuts in units including the investment bank as part of his plan to revive profit.
Earlier this month, Bank of America told investment bankers to expect compensation that averages 25 percent less than last year, people said this week. Employees in some departments were told packages were 30 percent smaller, and some managing directors will get no bonuses, said one of the people.
Awards include a combination of cash and shares, some of which can’t be sold for as long as three years. The bank’s decision to leave salaries unchanged comes after companies boosted them in 2009 to de-emphasize bonuses, which lawmakers said encouraged unwarranted risks that fueled the financial crisis. The bank uses a tiered system based on the size of the bonus when determining the percentage to pay in cash.
At Bank of America, a typical vice president’s base salary is about $175,000, while a director may make $250,000, and managing directors may earn $400,000, the people said. Bonuses can be several times base pay.