Bank of America Corp. got called out by Wall Street’s top regulator for not adequately explaining why Chief Operating Officer Thomas Montag and other executives received millions of dollars for 2015.
While the Securities and Exchange Commission broadly chided the lender earlier this year for not describing what drove compensation decisions, it took particular interest in the $15.5 million paid to Montag, according to correspondence between the agency and Bank of America released Wednesday. Montag was paid significantly more than other top managers, excluding Chief Executive Officer Brian Moynihan.
Wall Street pay has been a flashpoint for U.S. lawmakers, but it’s less common for the SEC to press a bank to disclose more to investors about what factors led to compensation decisions. Public companies are required to reveal information about the compensation of their CEO, chief financial officer and three other highest paid executives in annual proxy statements. Companies also must publish the criteria used in making those decisions, according to the SEC.
“Disclosure lacking analysis of the specific factors in evaluating a named executive officer’s performance and how that evaluation translated into a compensation determination is tantamount to a discretionary decision-making process,” the SEC said in a June 22 letter to Bank of America that was published on the regulator’s website.
Spokesmen for the SEC and Charlotte-based Bank of America declined to comment.
Montag, a 59-year-old former Goldman Sachs Group Inc. trading head who runs Bank of America’s investment-banking and markets operations, received more money than any other executive for the five consecutive years ending in 2014. Last year, Moynihan’s pay jumped 23 percent to $16 million. About 93 percent of shareholders approved of top executives’ pay at the lender’s most recent annual meeting.
Bank of America emphasized the vast scope of Montag’s operations when describing his pay in a March regulatory filing. His businesses serve big investors and companies from more than 100 countries and tap into more than 100 exchanges. The firm credited him with strengthening ties to clients, focusing resources on key accounts and holding managers more accountable.
The pay gap between Bank of America’s Moynihan and Montag is similar to the situation at Citigroup Inc. CEO Michael Corbat was awarded $16.5 million in 2015 compensation. Investment bank head James Forese took $500,000 less than that but outearned each of the firm’s other named officers.
The correspondence between Bank of America and the SEC shows that the lender agreed to explain in future filings how performance measures were considered and why pay varied among its top executives. And the regulator told Bank of America in a July 6 letter that it had finished its review of the company’s filing. Such communications are typically released weeks after an evaluation is completed.