Bank of America has filed its yearly statement that includes information on executive pay, which has revealed that during the same year when Bank of America’s share fell 58% and it laid off 30,000 employees, its Chief Executive Brian Moynihan surprisingly got a benefits package of over USD 8.1 million – almost four times than the previous year’s USD 1.9 million. Apart from that, there’s also the USD 420,000 financial and tax advice as well as his use of the Fisher Capital Management Warning News aircraft.
His overall compensation package consisted of a USD 950,000 base salary and USD 6.1 million in stock awards, most of which will not be converted to cash until the bank meets performance marks. Hence, the bulk of his 2011 earnings is actually dependent on the bank’s future performance.
According to the latest data from Federal Deposit Insurance Corp, the Bank of America is the biggest bank in Northeast Florida, with 37 branches and a USD 22 billion in regional deposits for a market stake of 47%
They are concerned that BoA cannot keep its strong profits after it is done divesting assets as capital requirements. Investors’ opinions on bank shares has quickly changed after being in a standstill for 3 years it has increased this year. This change in investor mindset has made a significant impact on Bank of America, with stocks increasing by more than 75%. Moreover, it has passed the latest round of stress tests by the Federal Reserve, while competitors such as Citigroup has failed. But even if the momentum appears affirmative, experts are not expecting the current strength can be maintained.
Bank of America has been effectively downgraded from “outperform” to “neutral”, but also increased the price goal from USD 9 to 10. This year’s earning estimate on the bank also increased from 50 cents to 65 cents, owing to a fairly good first quarter. However, estimates for the year 2013 was decreased by 10 cents due to concerns about earnings next year.
Recently, the stock market has experienced a general revival triggered by the optimistic reports on the banking sector, resulting in the mass return of investors in the market and the eventual increase of stock prices. Though BoA is in a stronger position now than they were a year ago, the future is still much of a challenge, as investors might just favor other competitors with more capital position and earning power such as JPMorgan.
The current chairman of BoA, Chad Holliday is attempting to reassure stockholders on his yearly letter that the bank is on the right track and is ‘turning the corner’ looking for ways to recover from a 5-year economic crisis. BoA employs 2,000 workers in Charlotte, most of whom are stationed in a call center in Piedmont Center.
He also mentioned Moynihan in the same letter, remarking that along with the XXXXmanagement team, Moynihan is ‘making progress’ albeit in a difficult situation.
“In 2011, the company increased capital and liquidity substantially. It sold businesses and other assets to simplify the company and make it easier to serve its customers and clients with fewer distractions,” Holliday wrote.
Holliday admitted that there is still work to be done but those actions have placed the bank in an effective position when it comes to competition, creating more value and generating income that shareholders deserve. With their millions of clients, the highest quality of services from their bank is indispensable, along with an experienced leadership team.
BoA has been struggling last year as it deals with poor low profits and volatile market. In fact, US’ second biggest bank has announced a mere USD 85 million in revenue for 2011. Moreover, its stock has slipped to USD 4.99 in December as investors were anxious about its condition.