Tuesday, February 1, 2011
And Now for Some Really, Really Good News
See this man? His name is Brian Moynihan and he is the CEO of Bank of America. You know them, they may own your mortgage, your credit card, your car, and your children’s education.
Brian (he owns my mortgage so I’m allowed a certain familiarity) just got a bonus for doing a good job. A really good bonus of $9.05 million in restricted stock. This is on top of his $950,000 annual salary and all the perks that go along with being a CEO—insurance, chauffeured car, immense expense account, corporate jet and ski lodge, etc. His co-worker Thomas K. Montag, who handles BOA’s global banking and markets, got $14.3 million in restricted stocks and a $900,000 cash award. Mr. Montag also makes $850,000 a year, so that his salary and cash bonus, taken together, come to roughly $2,000 an hour, regardless of where he is—the office, in anyone of his home, sleeping or sitting on the pot reading the Wall Street Journal.
You might recall that Bank of America got into trouble last year for not documenting mortgages adequately. In fact, according to the Investment Fraud Lawyer Blog put out by Page Perry, LLC, an Atlanta-based law firm representing investors in investment-related arbitration and litigation, “The biggest lender in the United States, Bank of America Corp., may have to book a charge totaling $8.5 billion in costs stemming from disputes over faulty mortgages and mortgages securities, according to a Bloomberg.com article written by Hugh Son. The company may take the charge in the fourth quarter of this year and the cost could grow even further with lawyers ‘smelling blood in the water’ as put by Christopher Kotowski, an Oppenheimer analyst.
“In a slide show last week, the bank pegged the cost of settling demands from private investors as being anywhere from zero all the way up to $10 billion. While the cost range is only considered a possibility, Kotowski says that he does "not believe that management would put a number like this into a presentation unless they thought there was a reasonably good chance that this will be the ultimate price-tag.
“Bank of America has already taken a $1.24 billion loss during the last three months of 2010 resulting from cost to end several mortgage securities disputes. The Bank also paid Fannie Mae and Freddie Mac $2.8 billion late last year, which according to the article leaves demands from private investors as the main concern of the shareholders.”
BOA’s shares took an 11 percent hit in 2010 following losses tied to repurchasing faulty mortgages from investors. For this, Brian Moynihan was rewarded handsomely.
How does that make you feel?