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BofA bumps CEO Moynihan's pay 25% as Citigroup cuts Corbat's

Saturday, February 18, 2017 - 08:17

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Bank of America Corp awarded CEO Brian T Moynihan US$20 million for his work last year, raising his compensation 25 per cent, while Citigroup Inc cut CEO Mike Corbat's by 6.1 per cent to US$15.5 million.

[NEW YORK] Bank of America Corp awarded CEO Brian T Moynihan US$20 million for his work last year, raising his compensation 25 per cent, while Citigroup Inc cut CEO Mike Corbat's by 6.1 per cent to US$15.5 million.

Mr Moynihan received US$18.5 million in stock grants for 2016, according to a regulatory filing Friday, up from the US$14.5 million he received for 2015. He hasn't received a cash bonus since 2007. Mr Corbat's pay included a US$4.2 million cash award and US$9.8 million in shares that pay out over years based on performance. Both executives received salaries of US$1.5 million.

Mr Moynihan, 57, has worked to boost the lender's profitability through cost reductions and by resolving legal matters left over from the financial crisis. The bank increased profit by 13 per cent to US$17.9 billion in 2016, and Mr Moynihan said in April he'd cap expenses at US$53 billion by the end of 2018, a US$2 billion drop from last year.

Despite dialing back costs, Mr Moynihan didn't achieve his long-term 60 per cent efficiency ratio target in 2016. Bank of America, the second largest US lender, ended the year with a 65 per cent ratio of non-interest expense to net income, an improvement from 69 per cent in 2015. The firm also hasn't achieved its 12 per cent target for return on tangible common equity, which remained below 10 per cent at the end of last year.

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Bank of America shares climbed 31 per cent in 2016, the most among the largest US deposit-taking lenders. The surge was largely due to a fourth-quarter rally in financial stocks fuelled by investor expectations that President Donald Trump's election would result in less regulation and lower taxes.

Citigroup's profit fell 14 per cent and return on assets failed to meet the 2016 target, leading CLSA Ltd. analyst Mike Mayo to criticize management for missed goals and uncertain targets that prevent investors from being able to hold the company accountable. The stock's 15 per cent gain last year trailed the 26 per cent advance of the 24-company KBW Bank Index.

Half of Mr Corbat's stock award for 2016 will be earned if the bank meets goals for return on tangible common equity and cumulative earnings per share, measured through 2019. The payout is capped at the target number of shares in case the bank's stock performance over that period is negative. The other half vests over four years subject to performance conditions that weren't specified in the filing.

The CEOs of other major Wall Street banks saw their 2016 compensation increase. JPMorgan Chase & Co boosted CEO Jamie Dimon's target pay by 3.7 per cent to US$28 million and Morgan Stanley's James Gorman was awarded US$22.5 million, a 7.1 per cent increase.

Goldman Sachs Group Inc hasn't yet disclosed pay details for Lloyd Blankfein, but the CEO's package for 2016 could be about US$22 million, not counting his long-term incentive, according to a Bloomberg estimate. That would be a decrease from the US$23 million he got in 2015.

Wells Fargo & Co also hasn't released 2016 executive compensation figures. The firm's board will probably decide to withhold bonuses from some top executives including CEO Tim Sloan and Chief Financial Officer John Shrewsberry to hold managers accountable in the wake of a scandal involving the opening of bogus accounts, a person with knowledge of the matter said last week. Denying the bonuses isn't meant to reflect findings of specific wrongdoing, the person said.

Citigroup also disclosed equity awards for other senior executives including President Jamie Forese and consumer chief Stephen Bird, which can be used to calculate total pay for 2016. Forese saw his compensation trimmed by 4.4 per cent to US$15.3 million, while Mr Bird got a 5.9 per cent raise to US$9 million, according to the filings and Bloomberg calculations using a previously disclosed formula and salary figures.

Bank of America didn't disclose complete pay details for Mr Moynihan's deputies, but chief operating officer Tom Montag got 412,196 shares, half of which are tied to performance, according to a separate Friday filing. They were worth about US$9.6 million based on a 10-day price average, which is the measure the bank typically uses according to its proxy. That compares with stock awards valued at US$8.7 million for 2015.

Chief financial officer Paul Donofrio received shares worth US$6.24 million under the same method.

The exact figures and other components of the deputies' pay will be disclosed later this year when both banks file their proxies.

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