After posting the biggest yearly profit since 2007, Bank of America Corp. (BAC) has rewarded its CEO, Brian Moynihan with a pay raise of 17%. This was disclosed in a regulatory filing with the Securities and Exchange Commission (SEC).
In 2013, Moynihan will receive $14 million in total ($1.5 million as base salary and $12.5 million as stock grants). Notably, he will not get any cash bonus. In 2012, he was given $11.05 million as stock grants, while his base salary was $950,000. Earlier in 2011, he received $7 million and in 2010, $10 million.
Under Moynihan, BofA’s financial performance has significantly improved. The company has been able to meet cost saving targets. Since 2010, the company has been restructuring its operations to focus on core business.
Additionally, in 2013, BofA’s net income grew nearly 265% year over year to $10.1 billion on the back of $88.9 billion of revenues (up around 7%). Further, the company's operating expenses declined 4%.
Additionally, in 2013, BofA resumed its share repurchase plan, following the approval of the same by the Federal Reserve. Given its strong capital position, the company is expected to continue rewarding shareholders. Furthermore, the company’s asset quality has shown substantial improvement.
All these have caused investors and analysts to become more confident about BofA’s growth prospects. Notably, the company’s share price rose nearly 30% in 2013 following 101% increase in 2012.
The Zacks Consensus Estimate for 2014 increased 1.5% to $1.35 per share over the last 60 days. Moreover, for 2015, the Zacks Consensus Estimate moved north by 1.3% to $1.62 per share over the same time period.
However, all is not well with BofA. The company continues to face litigation-related uncertainty. Since the acquisition of Countrywide Financial Corp. in 2008, it has spend more than $40 billion to resolve issues arising from losses from bad loans, mortgage-backed securities claims and lawsuits. The company still faces several litigations, which could have a material impact on its financial stability going forward.
Currently, BofA carries a Zacks Rank #3 (Hold). Some better-ranked major banks include The PNC Financial Services Group, Inc. (PNC), BB&T Corp. (BBT) and Fifth Third Bancorp (FITB). All of these have a Zacks Rank #2 (Buy).
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