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Writedowns, Blocked Pay Make Rough Day for BofA's Ken Lewis
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Bank of America, the nation's beleaguered leader in commercial lending, posted a $1 billion loss in the third quarter. Despite recent gains from its Merrill Lynch merger, the company is still dealing with commercial defaults and billions of dollars in consumer credit losses. U.S. consumers' mortgages and credit cards account for about 60 percent of the bank's loan portfolio, according to Reuters.
What's more, White House pay czar docked outgoing BofA CEO Ken Lewis $1.5 million from his salary this year. Rough day for the boss, but as Felix Salmon helpful contextualizes, cutting $1.5 million out of a yearly compensation worth $70 million (and overall compensation, including deferred stock compensation) is a bit like denying a morbidly obese person the tiny Maraschino cherry on top of a three-pound sundae.
"Since [pay czar Kenneth] Feinberg had no real jurisdiction over the big lump sum due Lewis, he just decided to bring the sum he could control down to zero," Salmon writes. And good on Ken (the czar, not the chief exec). To say Lewis has performed unevenly since the crash of 2008 would be a diplomatic understatement. He was bullied by the Treasury Dept, he likely lied to shareholders about the Merrill merger, he pushed out Merrill CEO John Thain for a somewhat manufactured bonus controversy and still presides over a money-losing bank at a time when other banks like JPMorgan are racking up intimidating profits.
To read more about Lewis' year, this.
What's more, White House pay czar docked outgoing BofA CEO Ken Lewis $1.5 million from his salary this year. Rough day for the boss, but as Felix Salmon helpful contextualizes, cutting $1.5 million out of a yearly compensation worth $70 million (and overall compensation, including deferred stock compensation) is a bit like denying a morbidly obese person the tiny Maraschino cherry on top of a three-pound sundae.
"Since [pay czar Kenneth] Feinberg had no real jurisdiction over the big lump sum due Lewis, he just decided to bring the sum he could control down to zero," Salmon writes. And good on Ken (the czar, not the chief exec). To say Lewis has performed unevenly since the crash of 2008 would be a diplomatic understatement. He was bullied by the Treasury Dept, he likely lied to shareholders about the Merrill merger, he pushed out Merrill CEO John Thain for a somewhat manufactured bonus controversy and still presides over a money-losing bank at a time when other banks like JPMorgan are racking up intimidating profits.
To read more about Lewis' year, this.
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