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Feb 04

Bank of America

Georgia Posted by: Georgia Print PDF
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 A Bank of America insider reports that the nation's largest bank spent $4.4 billion dollars last year on its bankers. This amount, 19% of its $23 billion in revenues comes to roughly $440,000 per employee. Lately, Bank of America as well as other large and profitable banks have come under intense criticism for its very large compensation and bonus packages, which have been especially odious when Americans in general have been facing economic insecurity. A spokesperson of Bank of America says that the bank has been trying to walk a fine line. Bank of America needs to reward its employees in a competitive manner otherwise, the bank will loose them to competitors and runs the risk of becoming non-competitive itself. The nations largest banks have reacted to the public outcry over bonuses by lowering pay a little and doing some restructuring of the way it hands out the bonuses. One way has been to give out less cash and more stock, stock which cannot be cashed in right away. This way the employee's reward is tied to the performance of the bank. The hope is that the employee will be incentivized to not take risks that might harm the firm. Another scheme would force employees to return money if they have taken actions that damaged the firm. Last year it was discovered that Bank of America paid $3.6 billion in bonuses to Merrill Lynch workers for fiscal year 2008. This action has landed the firm in serious trouble with the Securities and Exchange Commission which has initiated two legal actions against Bank of America. Although Bank of America has spent a very large amount on its bankers, this amount actually puts it in the middle. JPMorgan Chase spent $9.33 billion on its workers. This comes to about $380,000 per employee. Goldman Sachs spent $498,461 per person if its compensation pool was divided up evenly.

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rio
...
written by rio , February 04, 2010
If bankers think that they are worth a certain amount, they are just going to go where they can get this amount. Of course it makes sense that banks would pay their employees high salaries to keep them around.
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