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Bank of America CEO Took Pay Cut in 2014

BankofAmericaBank of America CEO Brian Moynihan took a 7 percent pay cut in 2014 amid the bank’s growing legal costs and government investigations into the bank’s lending practices that lead up to the financial crisis, according to The New York Times.

The Times reports, Moynihan was awarded $13 million in stock and cash last year, according to the bank’s proxy statement released Thursday. That was down from the $14 million he received in 2013.

And again, the head of the firm’s investment bank, Thomas K. Montag, was paid more than his boss. Montag was awarded $14 million in compensation, down from $15.5 million in 2013.

Last year was challenging for Bank of America and many of its Wall Street peers, as the banks settled years-long investigations with the Justice Department over shoddy mortgage-backed securities in the lead up to the financial crisis.

In August, Bank of America agreed to a $16.64 billion settlement with federal prosecutors to end inquiries into a mortgage cases that largely centered on the conduct of its Countrywide Financial and Merrill Lynch units. That price tag, which at the time was the largest settlement in corporate history, weighed on the bank’s profits last year, although the deal represented the last big legal issue stemming from the financial crisis.

Perhaps as big a challenge for Bank of America last year was how to increase its revenue amid low interest rates and rising regulatory costs. With those pressures showing no signs of abating, some investors fear that the near-term future for Bank of America and other large banks looks rocky.

Despite those challenges, Bank of America Corp defended their decision to hire Moynihan last fall, saying they made the move after careful consideration, according to the Wall Street Journal.

The Journal reports, in the Thursday filing, the bank said its board’s corporate governance committee “deliberates on and discusses the appropriate leadership structure for the board based on the needs of our company” at least every year.

Moynihan deserved the chairman job, the bank said, because of “leadership qualities, management capability, knowledge of the business and industry, and a long-term, strategic perspective” that he has laid out during five years as CEO, the bank said.

That decision to give the chairman role to Moynihan, CEO since 2010, has been criticized by some investors, partly because the board had to override a 2009 shareholder vote requiring that the jobs be held by separate people.

The board said it went through “months of thorough deliberation” before wiping out the shareholder amendment and said the 2009 vote was made during a different era, in the depths of the financial crisis. The bank acknowledged, however, that some shareholders who supported the 2009 proposal—which drew votes from large institutional investors who often vote in line with management—believe that the two roles should always be separated.

The board’s corporate governance committee “recognizes that there is a variety of viewpoints concerning a board’s optimal leadership structure,” the bank said.

The bank also noted that most big U.S. banks are run by a single person holding both the chairman and CEO roles. The board also didn’t find any conclusive data to prove any correlation between having an independent board chairman and “superior corporate governance or performance.”

The bank noted it had appointed another board member, Jack Bovender, as lead independent director when it made Moynihan the chairman. The bank said Bovender, who held the roles of chairman and CEO at hospital chain HCA Inc., had experience running a highly regulated company and showed “a readiness to challenge management.”

(Reporting by Christina Rexrode and Michael Corkery)

About Author: Samantha Guzman

Samantha Guzman is an award-winning visual journalist and graduate of the University of North Texas Mayborn School of Journalism. She specializes in visual storytelling and has skills in video, audio and photography, in addition to news writing. She has traveled to Mexico and Bosnia as an assistant for multiple multimedia projects and taught news writing, photojournalism, and narrative storytelling in the past.
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