The federal pay czar Thursday rejected Bank of America's proposed compensation plans for top executives, including an initial pitch for up to $12 million for chief executive Ken Lewis, calling the Charlotte bank's proposal too generous.
Even so, nearly all of the bank's top executives are still in line for $3 million to nearly $10 million in total compensation for 2009 if they meet performance goals. The exception is Lewis, who last week agreed to the government's demand that he give up his pay for the year.
Like other companies receiving "exceptional assistance" from the government, Bank of America was required to submit proposals in August for how it planned to pay its top 25 officers.
The pay czar, Ken Feinberg, proposed lower payments for the BofA executives, calling proposed amounts excessive or not in the public interest and saying pay should be more consistent with that of "similarly situated companies."
The U.S. Treasury Department said Feinberg's rulings represent a "fundamental transformation from the pay practices of the past," which favored large cash bonuses awarded for short-term performance. Feinberg, instead, is mandating that the vast majority of executive pay come in the form of stock that can be redeemed over several years, to better align the interests of executives with those of shareholders and taxpayers.
Bank of America had proposed cash salaries for each top employee, except the CEO, of either $700,000 or $950,000, according to a letter released by the Treasury Department on Thursday evening. It had asked for a "stock salary" for each person from $2 million to $19million, and it asked for long-term restricted stock awards with a potential value of $1.3million to $10 million each. The bank later withdrew part of the request, telling the government that Lewis and his direct reports would not be eligible for long-term incentive awards in 2009.
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