Bank of America (NYSE:BAC) Paid Out $4.4 Billion for Salary and Bonuses in 2009

An unnamed source close to the situation said that Bank of America (NYSE:BAC) awarded its people around $4.4 billion in salary in bonuses in 2009, averaging over $400,000 a worker.

This is in the trading and investment banking business of the company, which generated $23 billion in revenue during 2009, which makes the $4.4 billion pay out just under 20 percent of overall revenue.

While there has been a lot of public anger over bankers’ pay because of the recession, assuming the numbers are pretty accurate, this would put Bank of America somewhere in the middle of the compensation pack in contrast with its major rivals.

For example, JPMorgan Chase (NYSE:JPM) spent over double that in their investment banking unit to pay their people, revealing in January they spent about $9.33 billion. That looks outrageous at first, but Bank of America spread their pay among about 10,000 people while JPMorgan Chase paid about 25,000 people, which actually came to almost $380,000; a little less on average than Bank of America.

Goldman Sachs (NYSE:GS) compensated their people on average just under $500,000 each, and that was for 32,500 workers.

As far as public anger over the situation, one way the banks have been dealing with it concerning compensating their employees has been to gradually lower the cash paid out while offering more stock in place of it. That has been done to satisfy the idea workers’ pay and bonuses should be tied into the performance of the company rather than be guaranteed, regardless of how well the company generates profits.

Bank of America has used this compensation packages, with close to 95 percent of bonuses and pay being vested in stock over a three-year period. For those who aren’t receiving as much compensation, the company is offering closer to a 50/50 cash/stock split with their pay, while those with higher bonuses will receive most of it in stock.

“We attempted to balance the need to pay competitively with our understanding of the general concern over the level of compensation on Wall Street,” Bank of America spokesman Robert Stickler said. “The most important thing is that much more of year-end compensation is now deferred and tied to long-term stock performance and there are clawbacks.”
 
Clawbacks refer to those employees who take actions which could do harm to the long-term health of the company, and which they could have some of their pay reclaimed as a consequence, adding more checks-and-balances to their actions.