Bank of America’s BAC chief executive officer Brian T. Moynihan’s total compensation for 2020 fell 7.5% from the prior-year level. In a regulatory filing, management stated that the board of directors approved his compensation after an evaluation of various aspects of the bank’s performance in 2020, given the Covid-19 mayhem.
Moynihan will receive $24.5 million for his service during the year, as compared with the $26.5 million received in 2019. Of the total compensation, $23 million is in the form of equity incentive awards. Similar to the previous year, the remaining $1.5 million is his annual salary. Strikingly, he has not received cash bonus since 2007, although a portion of his stock grant will be settled in cash when it vests.
The total equity incentive comprises 30% cash-settled restricted stock units (RSUs), which will vest over a year. Nearly 20% of stock-settled RSUs will vest over the next four years and the remaining half of performance RSUs will be earned only if the company’s performance in the future adheres to certain standards.
The pandemic’s impact on BofA’s financial performance has been assessed to determine the CEO’s compensation. The bank’s profit plummeted 35% in 2020, since it had to set aside billions of dollars in reserves to cushion against the pandemic-induced bad loans and low interest rates crumpling revenues.
Shares of BofA appreciated 28.8% in 2020 compared with 34.1% growth witnessed by the industry. In 2020, the bank realized almost $18 billion in net income, bolstered its capital and liquidity, enhanced book value per share and dispersed more than $13 billion to shareholders through dividends and share buybacks. Such lucrative factors and the company’s discreet approach to capital planning, with $36 billion excess capital above minimum requirements, can be the major reasons for its share-price appreciation.
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Currently, BofA carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Wall Street biggies that have announced compensations for CEOs include Wells Fargo WFC with a 12% cut, while The Goldman Sachs Group, Inc. GS announced a 36% reduction. Among other big banks, Citigroup Inc. C reported a 21% year-over-year decline.
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