Bank of America Paid $38 Million To Chief in 2003.
According to the proxy statement of Bank of America's shareholders, the bank paid its chairman and chief executive, Kenneth Lewis, a total of $38 million in compensation. The proxy statement was filed with the Securities and Exchange Commission. Mr. Lewis is 57 years old. This is his third year running the bank in Charlotte, North Carolina. He receives a salary of $1.5 million, plus a bonus of around $5.4 million. His compensation package included restricted stock that is valued around $10.7 million.
Last year Mr. Lewis exercised options that are valued at $20.3 million, and was granted the right to purchase 200,000 of the bank's shares, which is the same number as 2002. The plan fully vests in 2007. When setting Mr. Lewis's compensation package, the board's compensation committee stated that the company "achieved above target performance in stockholder satisfaction measured against all of the key financial goals established earlier in the year." This includes growth in revenue and net income. The bank's stock also rose 16% last year.
Even with all of these positive numbers, the Bank of America still had some problems with the state and federal regulators. This is including, but not limited to, an implication in a massive probe of the mutual-fund industry. They were one of the first firms that were indicated in illegal trading that was led by New York Attorney General Eliot Spitzer.
This article ties in greatly with the chapter on employee compensation. It is not as much an article on the accounting for compensation, but it is more like a justification for the reasons that companies come up with these packages.
Before reading this article, I had no real world understanding of what made up these packages. I was amazed when I saw how much money the Bank of America was putting into their compensation package for Mr. Lewis. Even more amazed, was I, when I read that the shareholder's voted this package as acceptable.