Will Bank of America Be Raising Base Salaries For Key Employees?
In an attempt to deflect public criticism but still retain key employees, Bank of America is reportedly considering raising salaries as a way of "rewarding people in its investment-banking unit".
Brian Moynihan, president of global banking and wealth management at Bank of America, said in a recent memo that salaries could increase as a percentage of total compensation, while bonuses would decrease. Bloomberg.com is reporting that the bank was considering an increase on base salaries of "as much as 70%".
The company is especially mindful about paying out bonuses after the recent Merrill Lynch and AIG fiascos.
Many firms, in my opinion, will end up following this blueprint of higher base salaries coupled with lower bonuses.
The general public has zero appetite for hearing about financial firms receiving government aid and paying out large bonuses. Zero.
Many of the top employees at these firms signed bonus-laden deals with very low base salaries.
In order to prevent an exodus of their top talent, these firms will be forced to significantly raise base salaries. They can't pay out bonuses in this current environment, so raising salaries is really their only choice (if they want to retain their current employees).
Bloomberg.com is reporting that BAC is considering the following changes:
1. Raising annual base pay for "some" managing directors to $300,000 from $180,000
2. Less-senior directors would go from $150,000 to $250,000
3. Vice presidents would receive $200,000, up from $125,000 on average
Will the public swallow higher base salaries in lieu of outrageous bonuses?
Or will they be outraged all the same?
Source: Bank of America May Raise Investment Banker Salaries
Filed under: General Market News