Bank of America Corp is deferring payment last year’s bonuses of US$50,000 or more at its capital markets and investment banking units over three years, people familiar with the matter said.
Employees who had expected a bonus this month based on last year’s work will instead get most of it in three annual installments, starting in February next year, said the people, who declined to be identified because the plan isn’t public.
A fraction of each bonus — perhaps less than 10 percent of the amount due — will be paid in quarterly installments this year, the people said.
The Charlotte, North Carolina-based bank will pay interest on the remainder at the London interbank offered rate, or Libor, they said. The rate for three-month dollar loans on Friday was 1.18 percent.
“This is historic,” said Jeanne Branthover, managing director in charge of global financial services for Boyden Global in New York, an executive search firm. “Employers can get away with anything right now because people are just happy to be employed.”
Bank of America doesn’t comment on compensation plans, spokesman Scott Silvestri said.
BUYING MERRILL
The bank is slashing up to 35,000 jobs to achieve US$7 billion in annual cost savings after its purchase this month of Merrill Lynch & Co, the world’s largest brokerage. Bank of America won’t disclose how many of the cuts are occurring in its investment banking units.
Merrill Lynch paid about US$3.6 billion in bonuses days before its sale to Bank of America was completed on Jan. 1, Fortune magazine reported on its Web site. New York Attorney General Andrew Cuomo is studying whether the payments violated securities laws, a person familiar with the matter said.
Cuomo also wants to know what Bank of America chief executive officer Kenneth Lewis knew about the bonuses and Merrill’s US$15 billion net loss in the fourth quarter, the person said. Lewis, 61, fired Merrill’s CEO John Thain on Jan. 23.
Lewis has said he won’t receive a bonus this year after the bank reported a US$1.8 billion loss in the fourth quarter, its first deficit since 1991. For the year, the bank earned US$4 billion while its stock price declined by two-thirds.
The US Treasury agreed last month to provide US$20 billion in additional capital and US$118 billion in asset guarantees to Bank of America to help absorb losses at Merrill Lynch.
OBAMA
US President Barack Obama and Democrats in Congress are moving to cap Wall Street bonuses and pay. White House spokesman Robert Gibbs said I was “very safe” to assume that new rules guiding the administration’s financial rescue will address bonuses and executive pay.
Obama lashed out at Wall Street on Thursday, saying it was shameful that employees were paid more than US$18 billion in bonuses while their crumbling financial sector received a historic bailout from US taxpayers.
Obama was responding to reports that Wall Street executives were paid billions in bonuses last year as Congress poured hundreds of billions into the financial system to address an economy reeling from souring debt, defaulting mortgages and choked lending.
With new Treasury Secretary Timothy Geithner at his side, the president said the payouts were “the height of irresponsibility.”
The Financial Times reported on the bonus deferrals earlier, citing unidentified executives.
MetLife Inc, the biggest US life insurer, said it was introducing a new pay-for-performance plan tied to profit over three years and how it compares with industry peers.
Financial companies in New York City paid cash bonuses of US$18.4 billion last year, the sixth-highest in history, even as they posted record losses, data compiled by the office of state Comptroller Thomas DiNapoli said.
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Huawei Technologies Co’s (華為) latest smartphones carry a version of the advanced made-in-China processor it revealed last year, results from an independent analysis showed. This underscored the Chinese company’s ability to sustain production of the controversial chip. The Pura 70 series unveiled last week sports the Kirin 9010 processor, research firm TechInsights found during a teardown of the device. This is a newer version of the Kirin 9000s, made by Semiconductor Manufacturing International Corp (SMIC, 中芯) for the Mate 60 Pro, which had alarmed officials in Washington who thought a 7-nanometer chip was beyond China’s capabilities. Huawei has enjoyed a resurgence since
purpose: Tesla’s CEO sought to meet senior Chinese officials to discuss the rollout of its ‘full self-driving’ software in China and approval to transfer data they had collected Tesla Inc CEO Elon Musk arrived in Beijing yesterday on an unannounced visit, where he is expected to meet senior officials to discuss the rollout of "full self-driving" (FSD) software and permission to transfer data overseas, according to a person with knowledge of the matter. Chinese state media reported that he met Premier Li Qiang (李強) in Beijing, during which Li told Musk that Tesla's development in China could be regarded as a successful example of US-China economic and trade cooperation. Musk confirmed his meeting with the premier yesterday with a post on social media platform X. "Honored to meet with Premier Li