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Bank Of America's Lewis Opposes $500,000 Executive Pay Cap

UPDATED WITH BAILOUT REPAYMENT ESTIMATE:

Ken Lewis, chief executive of embattled Bank of America, said he opposes the $500,000 pay cap for top executives of banks receiving government funds because he's afraid of losing top talent, according to an interview moments ago on CNBC.

President Obama has decreed that companies taking advantage of federal bailout money going forward under "exceptional circumstances" must cap the pay of their top execs at $500,000.

"I don't feel good about the $500,000 cap, and it's not me -- I'll take $500,000," Lewis said. "However, beyond the top management team, you're talking about 20 to 30 other (employees) who can go to foreign banks, can go to asset-management firms."

Lewis said that former Treasury Secretary Hank Paulson pushed Bank of America to go ahead with its acquisition of Merrill Lynch last year, even after B of A saw the big losses at Merrill and tried to walk away from the deal. Treasury gave B of A some $20 billion to help it swallow Merrill.

UPDATE: Bank of America has received a total so far of $45 billion in taxpayer bailout money. Lewis said he hopes his bank can pay back the federal government within three years.

"They said it's not in your best interest or in country's best interest to walk away from this," Lewis said Treasury told him. "Too much damage will be done to the industry, to the country, to you. It was enlightened self-interest" to stay in the Merrill deal, Lewis said.

"What's good for America is good for Bank of America," Lewis said.

It's also worth noting that Lewis has purchased an additional $1 million worth of shares in his bank in an effort to show confidence in the institution.

Bank of America swallowed Merrill Lynch last year and with it, mountains of debt. Former Merrill Lynch chief "Champagne" John Thain was forced out of Bank of America last month after clashing with Lewis (and, after it was revealed, spending more than $1 million to renovate his office at Merrill Lynch last year and pushed through million in bonuses for Merrill execs just before the B of A deal closed.)

Bank of America has already received $45 billion in taxpayer money, including a $20 billion federal injection last month to help it digest Merrill.

--Frank Ahrens

By Frank Ahrens  |  February 6, 2009; 3:20 PM ET
Categories:  The Ticker  | Tags: Bank of America, Ken Lewis, Paulson  
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Comments

Hey Ken! If you don't want the $500K salary, I know a lot of people who would be willing to take your job. And they probably wouldn't f@#$-up as badly as you and your CEO friends have.

Don't go away mad, Ken.

Just go away.

Posted by: sasquatchbigfoot | February 6, 2009 12:25 PM | Report abuse

If the "top talent" at these firms that have lost so much money want to leave...let them!! If they were any good we wouldn't have to be bailing these companies out. McDonalds seems to be doing well...maybe they can work there...but not with money, maybe flipping burgers.

Posted by: waltej1 | February 6, 2009 12:30 PM | Report abuse

I expect that the $1 million worth of BOA stock that Mr. Lewis purchased amounted to little more than "pocket change" for him. As for losing "top talent" to foreign banks or other asset-management firms - given current economic climate (both national and world-wide) and the less than "steller" reputation American bankers have after creating this "train wreck" we call an economy, I wish them luck finding another highly-overpaid position until things improve. Sounds like BOA could use a change of management anyway after getting suckered into the Merrill-Lynch pig-in-a-poke.

Posted by: Bushwhacked1 | February 6, 2009 12:37 PM | Report abuse

Is anyone surprised that Ken Lewis opposes the $500k pay cap? Do you suppose that might be why he said BOA won't take more taxpayer money? After all, he makes $20 million and gets taxpayer money to bail out his screwups. Nice deal. Wish we all could have such luck.

We are ex-BOA customers, in the process of closing all our accounts and withdrawing our investments. BOA made stupid business decisions recently, by discouraging refinancing and reneging on promises to their customers. BOA sent what I call the "F* you" letter to all of its customers who don't have $500k portfolios. It was a work of art - the most mangled corporateze I've ever seen, and I've seen some bad stuff. But how do you tell your customers that you no longer "value" them without sounding churlish?

The TARP was supposed to promote lending. The reality is that it is is not - at least not with BOA. BOA is not discouraging refinances and loans for those with poor credit - they are discouraging refinances across the board, even for those with perfect credit scores.

Posted by: jgwlaw | February 6, 2009 5:33 PM | Report abuse

Ken -- if you object to the salary cap, don't take my money; rebuild the bank your own way and if you succeed, THEN you deserve the big bucks.

Regarding the potential loss of top talent, where do you suppose this top talent is going to go, exactly?

Posted by: maggiestansfield1 | February 6, 2009 7:03 PM | Report abuse

Hey, no problem. Let any of them who don't like $500,000...hit the road. It is totally obvious that most of them have FAILED, FAILED, FAILED to go their jobs. Let them take a hike. We don't need them. We have tons of college grads who could absolutely do no worse. To Hell with them.

Posted by: jacksplat1 | February 6, 2009 7:07 PM | Report abuse

Here's the solution Mr Lewis... QUIT.

Posted by: whocares666 | February 6, 2009 7:09 PM | Report abuse

"I don't feel good about the $500,000 cap, and it's not me -- I'll take $500,000," Lewis said. "However, beyond the top management team, you're talking about 20 to 30 other (employees) who can go to foreign banks, can go to asset-management firms." What is this guy smoking? Many countries cap executive pay/compensation/perquisites, so all you whiners go elsewhere. As for asset management firms, how about Lehman or Merrill Lynch or Goldman Sachs...oh yeah, they're on the downhill slope, too. The argument about "top executives" being highly sought after and being such hot commodities, I say BALDERDASH. Lewis and others, take long, hard look at what you have wrought for the U. S. and world economy. You should be tarred and feathered or put in stockades where all manner of rotting fruit, vegetables, and excrement can be tossed at you. Then you should be trotted off to spider hole prisons to serve out the rest of your years crying over the loss of your golden parachutes. In addition, all your assets should be frozen and you also be forced to make restitution for all the poor decisions you and your peers made that put your companies in financial jeopardy. At my current salary, it would take 14 years for me to earn the $500,000 you bemoan about. Get a grip, suck it up and show some remorse.

Posted by: politico5 | February 6, 2009 7:19 PM | Report abuse

You get the idea that the human beings, most of them men, who put their trousers on one leg at a time, the same as a common day laborer, are somehow "special," and worth all that lucre that they, being in charge, bestow upon themselves, no questions asked. There are plenty of "brilliant" people in other lines of work who earn far less and do society a lot more good. The human meat market is crazy. It pays huge sums for the marginally talented and not so much for people who actually advance civilization.

Posted by: BlueTwo1 | February 6, 2009 7:30 PM | Report abuse

Guess what, Mr. CEO. BofA has no (that's 0) employees worth keeping. Any company that takes $45 billion of taxpayer money (or even $1.00) has not one employee worth keeping. You'd better hope you lose them all and rebuild the company with smarter and hungrier staff at half the payroll.

Posted by: llrllr | February 6, 2009 7:39 PM | Report abuse

Lewis said: "I don't feel good about the $500,000 cap, and it's not me -- I'll take $500,000," Lewis said. "However, beyond the top management team, you're talking about 20 to 30 other (employees) who can go to foreign banks, can go to asset-management firms."

Bye bye--don't let the door hit you in the ass on the way out!

Like we need these incompetents anyway?

Posted by: tmcproductions2004 | February 6, 2009 7:43 PM | Report abuse

Oh my goodness, I"m a scared stockholder!! What will happen if Ken Lewis and his cronies take a pay cut?

Let these genius executives go, free them from their contractual bondage, get their passports validated, enroll them in language schools. Bon Voyage, you ego-centric A-holes.

I doubt a single one of them can find an overseas company dumb enough to employ them. What rubbish!

Posted by: howjensen | February 6, 2009 7:56 PM | Report abuse

"I don't feel good about the $500,000 cap, and it's not me -- I'll take $500,000," Lewis said. "However, beyond the top management team, you're talking about 20 to 30 other (employees) who can go to foreign banks, can go to asset-management firms."

Let those 30 mangy dogs go to wherever they want & good riddance.

Posted by: alarico | February 6, 2009 8:04 PM | Report abuse

So Ken Lewis says the bright lights who got us into this mess won't stay if we cut their salaries to a mere $500,000? Good Riddance! Joseph Goebbels said, if you tell a big enough lie, often enough, the people will believe you. We have to let these CEOs know that the people are not that dumb. We know that salaries aren't linked to recipients' unique intelligence, effectiveness, importance to society, integrity. They reflect as much, one's ability to make good connections.

People: SPEAK OUT! Refute these myths in any forum you can. Let your members of Congress know that you are not intimidated into belief by the words of failing CEOs. Write to your newspapers. Talk to your neighbors. Let common sense prevail over the self-serving propaganda of the Masters of the Universe.

Posted by: farhorizons | February 6, 2009 8:21 PM | Report abuse

Top executives being limited to "only" $ 500,000 in annual salaries can hardly do a worse job as the "top talent," who received millions, but were largely responsible for the greedy, financially reckless policies which led to the current financial and economic problems of this country. The implication is only greedy people, preoccupied by with making heaps of money, are sufficiently motivated to wisely manage companies.

Posted by: Aprogressiveindependent | February 6, 2009 8:23 PM | Report abuse

I am sure there are plenty of people who would work for $500,000 per year. The innocent employees of financial institutions who were brought down by their supervisors come to mind.

Posted by: jeanhecht | February 6, 2009 8:23 PM | Report abuse

Not a problem. Let these "captains of capitalism" simply refuse tax dollars and dig themselves out of the hole they dug themselves.

Posted by: slim2 | February 6, 2009 8:34 PM | Report abuse

Ken Lewis,

BofA was doing fine, before you acquired Countrywide, and then Merrill Lynch, with allthe losses, anticipated and unanticipated they brought in. You knew of the multimillion dollar bonuses at Merrill, and looked the other way, until it attracted too much public scorn, and then handed John Thain his walking papers.

Now you have taken BofA into severe financial strains. Six months ago your stock was $30, three months ago it was $20, now it is $6. There are rumours that you will be handed the pink slip.

This is the kind of "Top Talent" that you are afraid to lose!

Don't let the door hit you on the way out.

Posted by: pKrishna43 | February 6, 2009 8:42 PM | Report abuse

You know what? These talents you are afraid of losing are the greedy morans who got us into this mess. Granted, we may have all contributed except someone like me. I have no debt, always worked, always lived within my means and pinched and saved and look where you got me. Let them go if they want to go to the third world country. Clearly, they do not deserve our help. If they are so clever and talented, they should have the guts and faith enough in their belief and in our country to stick around and work together to make wrong right. But if they want to flee, by all means, let them go!

Posted by: pelohoki | February 6, 2009 8:51 PM | Report abuse

We are not the only country in financial distress. (although, it may all be the US's fault) Financial institutions in other countries are closing down; being bought, nationalized; if "talent" wants to go foreign; let them. Obviously, what we have had; is not talented (just greedy).

Posted by: linda_521 | February 6, 2009 8:54 PM | Report abuse

It's unbelievable, I can't quite keep quiet about it. If you're so smart, Ken Lewis, you'd know our view of the country's financial landscape has drastically changed and, therefore, keep a very very low profile at this time. You ought to know that the country's in the brink, sort of like standing on a knife's edge, you know what I mean? No. You don't. If you did and has an inkling of how many millions and millions of people are suffering, you would not have opened up your big mouth to say something so arrogant like this. What's good for BoA is good for the country? It's a bit like throwing gas on the simmering fire. Keep quiet!

Posted by: pelohoki | February 6, 2009 9:02 PM | Report abuse

Ken Lewis is stamping his feet and holding his breath like former Sen. Ted Stevens, threatening to resign if he doesn't get his way. Ok Ken, you win, there's a bus leaving at six, be under it!

Posted by: hairguy01 | February 6, 2009 9:08 PM | Report abuse

It would really be a shame to lose some of these Top Executives from BofA when they have done such a good job of screwing BofA up!
They are probably in really high demand at other financial institutions who are looking for someone they can over pay so they can lose money for them.
Based on their track record, they would be overpaid at $500k per year!

Posted by: NobleDog | February 6, 2009 9:55 PM | Report abuse

I read through the comments quickly but I don't think I spotted a single person in agreement with old Ken's thinking. Let me add my own voice to the chorus. Is he nuts?? Take a hike, Ken.

Posted by: nfbindc | February 6, 2009 10:19 PM | Report abuse

Lewis's "top talent" has caused me to lose about $50,000 so far! I'd fire them all.......

Posted by: aeaustin | February 6, 2009 10:20 PM | Report abuse

Ken Lewis represents everything that is so wrong about the Misfortune 500 companies, of late.

Posted by: msbhong | February 6, 2009 10:45 PM | Report abuse

I haven't seen a lack of people applying for a job which pays only $400,000 per year --POTUS. Based on that salary, capping pay at $500,000 will probably not cause a rush for the exits.
I'd cap the pay of those receiving a bailout at the SES level. I was going to propose a GS-15 cap, but I'm feeling generous.

Posted by: sensible | February 6, 2009 11:36 PM | Report abuse

I think it would make more sense to put the CEO cap in some proportional terms, like saying that CEOs can't make more than 2 times the average salary of their top executive staff, and also that no management employee (non-hourly and non-commission-sales people) could accept any bonuses, stock options, etc., in excess of 25 percent of their annual salaries. That would cap abusive levels of compensation without putting a hard dollar figure on it just to give Congressmen a cheap headline if someone gets paid $500,001.

Posted by: ripvanwinkleincollege | February 6, 2009 11:39 PM | Report abuse

This man is either totally clueless or he thinks that the rest of us are. After reading his comments it's easy to see how he and his "top talent" ran their corporation into the ground.

Posted by: pmorlan1 | February 6, 2009 11:57 PM | Report abuse

I think the $500K pay cap contains a provision that the compensation can be higher if it is in the form of stock options and other deferred compensation that doesn't pay anything until after the taxpayers have been completely repaid.

It sounds like the "top talent" would prefer to take the money right away and run, leaving behind whatever mess happens later. That is how people in the finance industry were compensated in the past and how they should never be compensated in the future.

Any performance-based compensation should be based on at least 5 or 10 years experience with financial deals, not just a few quarters. That is exactly how Wall Street people got big bonuses for mortgage-related deals that were guaranteed to collapse as soon as the ever-increasing interest rates went up high enough the homeowners couldn't pay anymore.

It wasn't the borrowers. According to a Newsweek article a few months ago, there are institutions that deal with "sub-prime" borrowers honestly and prudently and have below-industry default rates. And their top executives have salaries well below the $500K limit.

Posted by: StanKlein | February 9, 2009 5:55 PM | Report abuse

I'm laughing out loud at these comments; it's the only funny thing about the entire situation. I'm down so far I could cry at the losses these
great talents" have brought us to.
As others have said " don't let the door hit you..." All of you.

Posted by: katefromhackensack | February 9, 2009 6:31 PM | Report abuse

I'm laughing out loud at these comments; it's the only funny thing about the entire situation. I'm down so far I could cry at the losses these
great talents" have brought us to.
As others have said " don't let the door hit you..." All of you.

Posted by: katefromhackensack | February 9, 2009 6:32 PM | Report abuse

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