Bank of America (BAC) has decided to defer all bonuses bigger than $50,000 until 2010 and beyond, says Greg Farrell of the FT. Employees are reportedly furious, especially as this news comes less than a month after Merrrill Lynch staff ran off with $4 billion.
Bank of America is planning to defer bonus payments to employees in its capital markets and investment banking units this year, according to several executives familiar with the situation.
The restrictive new policy will affect bonus payments of $50,000 or more and is expected to be announced on Thursday, when BofA informs employees of their 2008 bonuses.
BofA employees, who would normally receive their 2008 bonuses in February, will now have to wait until February 2010 before getting one-third of their 2008 bonuses. The remaining two-thirds would be paid out in 2011 and 2012.
This move is obviously a reaction to the outrage that followed the bailout-for-bonuses at Merrill. It is also probably an attempt by CEO Ken Lewis to save his job. It’s risky: Lewis may win points with the Board and American public, but employees will hate him–especially after watching Merrill Lynch destroy their 401ks by crushing the BAC stock price.
BOFA staffers are said to be near revolt:
Word of the forced deferrals has sparked anger at BofA’s capital markets operations in New York and London.
BofA staffers are seething at the disparity between their bonuses and those at Merrill Lynch, a feeling which does not bode well for attempts to merge the two groups into one seamless operation.
Moreover, having constructed a lifestyle around the near-certainty that there would be some kind of bonus each February, some BofA executives will have trouble making ends meet this year, which could lead to departures above and beyond the 3,000 or so cuts that are expected in the unit this quarter, insiders said.
“This is going to cause an uproar,” says one BofA executive familiar with the matter. “There will be cash flow issues for families.”
The decision must be all the more infuriating after listening to John Thain tell the world that Merrill had to pay bonuses or all the talented people would leave. What are BOFA staffers? Chopped liver?