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What Led to a 25% Pay Rise for Bank of America (BAC) CEO?

Bank of America Corporation 's BAC Chief Executive Officer, Brian T. Moynihan has been awarded with an annual salary of $20 million for his performance in 2016. This represents a raise of 25% from his pay package in 2015 and is the highest amount he will receive since he started working for the company.

The CEO's total compensation package includes a base salary of $1.5 million and an $18.5 million stock-based incentive for 2016, of which 50% is subject to the performance of BofA over the next three years. Notably, the base salary remained unchanged while stock-based compensation increased by $4 million from $14.5 million in 2015.

BofA's aim is to record an average return on assets of 0.80% and augment its adjusted tangible book value by 8.5%. On achieving the same, Moynihan will be awarded his incentive.

The pay raise of the CEO came on the back of certain factors, including the company's financial performance in 2016. The company's earnings increased 13% from 2015 to $17.9 million, marking the second highest earnings in its history. Moreover, the company reported total shareholder return of 33.3% in 2016 and returned $6.6 billion to its common shareholders. Further, it also witnessed historically low credit losses.

Even though a challenging operating environment and lower oil prices during the first half of 2016 negatively affected the performance of BofA shares, the stock witnessed an improvement in the second half. Moreover, Trump's win and expectations of lesser regulations and lower taxes injected further optimism. As a result, shares of the company gained nearly 31.3% in 2016, outperforming the 19.4% gain for the Zacks Categorized Major Regional Banks industry.

Among the other major banks, JPMorgan Chase & Co.'s JPM CEO Jamie Dimon was paid an annual salary of $28 million, up 3.7% from the prior year. Also, Morgan Stanley's MS CEO's compensation increased 7% to $22.5 million. However, the pay of Michael Corbat, CEO of Citigroup Inc. C was cut by 6% from the previous year, resulting in his annual salary of $15.5 million.

Though some of these CEO's have received higher compensations in absolute amounts for 2016, none have received a pay hike as high as Moynihan's.

Moynihan, who is also the Chairman of the company, has been constantly trying to control costs and has been settling various lawsuits since the time he assumed leadership. Moreover, the company remains well positioned to grow further, supported by a solid balance sheet. Also, its cost-cutting initiatives are likely to improve profitability going forward.

Currently, BofA carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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