Bank of America’s retention plan

Posted by Marc Hodak on February 12, 2009 under Executive compensation | Be the First to Comment

Bank of America had announced a deferral program for their IB bonuses this year that included stretching out payment over the next four three years.

So, BofA got bankers to work for relatively low salaries with the promise of potentially significant bonuses (the norm in investment banking).  The IBs had a crappy year, so their bonuses are down by, like, 80 percent.  Fair enough.  Now, they’re told that their bonuses, such as they are, won’t actually get paid this year.  And, they aren’t actually vested in the payout–if they leave, they forfeit them.  And that instead of getting cash, they’ll be getting 30 percent of their bonus in equity.  Boy, they’ll be burning the candles on both ends for that one!

Maybe BofA’s reasoning was something along the lines of, “Well, we accelerated the bonuses for Merrill employees, so if were radically defer the bonuses for our other employees, maybe the public will consider us even, you know, on average.”

Maybe this new policy led to this sign?

HT:  The ever-fabulous Dealbreaker

Update:  BAC apparently reconsidered, and made the deferrals slightly less back-ended (no pun intended)