Two Former BofA Executives To Get Millions In Severance
Two top Bank of America executives who left in a management shake-up last month will receive multimillion dollar severance payments, according to a securities filing from the bank Friday afternoon. Sallie Krawcheck, who was president of wealth and investment management, is slated to receive a year's base salary, $850,000, plus a $5.15 million lump sum payment. Joe Price, formerly head of consumer and small business banking, also will receive a year's salary of $850,000, plus a $4.15 million payout. The two left the company Sept. 6 in an executive reorganization announced as part of the company's streamlining initiative. The base salaries will be paid over 52 weeks following that day, according to the separation agreements filed with the Securities and Exchange Commission. The lump sum payments will be made at the end of the year, on Sept. 7, 2012. Spokesman Scott Silvestri said the bank had no comment on the agreements. In order to receive the payments, both Price and Krawcheck must not work for a competing company. They also must be available for transitional and consulting services. They waive any legal claims against the company. The two will each keep health benefits for the year and receive outplacement services and tax preparation services for the 2011 tax year. Price was a Charlotte-based executive who had served in a number of posts at the bank in his career, including chief financial officer. He took his most recent role in January 2010. Last year, Price made $800,000 in base salary. His target cash bonus was $2.8 million, but executives did not receive bonuses last year because of the bank's poor performance, according to the bank's most recent proxy statement. The bank posted a net loss of $2.2 billion in 2010, according to its annual report. Krawcheck, a former Citigroup executive who was hired by Bank of America in 2009, led the stockbrokers brought over from Merrill Lynch after its acquisition. She made a base salary of $800,000 in 2010, plus about $5.36 million in stock awards. Her target cash bonus for last year was about $4.6 million, but she did not receive it either. The bank does not have any agreements with executives regarding cash severance payments in the event they leave the company, according to the proxy statement. It does have a policy not to grant severance payments that exceed two times base salary and bonus, unless approved by shareholders. The reorganization was part of Project New BAC, an overarching initiative by CEO Brian Moynihan to reduce the company's costs. The bank expects to cut about 30,000 jobs, more than 10 percent of its workforce, in its first phase. Charles Elson, a University of Delaware professor who studies executive compensation, said the payouts do seem like a large amount of money for a shake-up, but that it's hard to judge whether they are fair just by the amount. "On its face, an investor might have some heartburn, but there might be some explanation," he said. "I'm hesitant jumping to an angry conclusion."