Bank's leader earns less as profits dip, and stocks underperform
Bank of America (BoA) CEO Brian Moynihan has taken a 3% pay cut in 2023, a year that wasn’t too kind to the bank’s bottom line or its stock performance compared to its main competitors.
The details, shared in a recent document from the bank based in Charlotte, North Carolina, reveal that Moynihan’s salary remained at $1.5 million with an additional $27.5 million in stock incentives. This slight dip in compensation follows the previous year’s reduction of 6.3% when his pay was adjusted to $30 million due to falling earnings and stock prices.
The past year presented numerous challenges, not just for Bank of America but for the banking sector at large, particularly smaller institutions hit hard by rising interest rates. These increases adversely affected the value of debt investments, including the long-dated Treasuries and mortgage bonds that Bank of America had invested in during times of lower rates. While these investments didn’t threaten the bank’s survival, they certainly dented its profits.
The bank’s board took into consideration “Moynihan’s leadership under this operating model, particularly in this period of considerable economic uncertainty,” and acknowledged the firm’s continued success in 2023 when determining his pay package.
This comes at a time when the financial world is intensely scrutinizing Wall Street’s compensation practices amid a slowdown in global deals leading to significant job cuts across many banks.
Bank of America reduced its headcount by 3,838 employees through attrition, ending 2023 with 212,985 employees. The bank’s net income slipped to $26.5 billion from $27.5 billion the year before.
In terms of share performance, Bank of America’s shares rose by 1.7% in 2023. This performance lagged behind JPMorgan Chase & Co., which saw a 27% surge, and Citigroup Inc., which gained 14% during the same period.
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Meanwhile, other banking leaders like Morgan Stanley’s James Gorman and JPMorgan’s Jamie Dimon received significant pay increases in 2023. Gorman received a 17% increase in pay to $37 million, and Dimon’s pay grew by 4.3% to $36 million, a year in which JPMorgan achieved the highest profit in the history of American banking. Wells Fargo & Co.’s CEO, Charlie Scharf, also received an 18% increase, bringing his compensation to $29 million.
Brian Moynihan, one of the longest-serving CEOs of a major US bank, has expressed his interest in continuing his leadership for years to come. Over the past 14 years, he has guided Bank of America through challenging times, including the global financial crisis and the COVID-19 pandemic.
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