EXCLUSIVE: BofA to Give Free Stock to Thousands of Employees, Including Merrill FAs
Donning their Santa Claus suits, Bank of America Chairman and Chief Executive Brian Moynihan and his board are awarding company stock to thousands of employees who make as much as $350,000 annually.
Details of the “special grant” of 200 to 500 restricted stock units to people who will have earned between $100,000 and $350,000 in total compensation in 2018 will be made in early 2019, Moynihan wrote in a company-wide message dated October 29 and reviewed by AdvisorHub.
The shares will be given to full- and part-time employees globally, and will vest in equal payments over four years—similar to some RSUs that the bank’s high-earning employees are already offered as deferred “performance” bonuses. Private bankers at the company’s U.S. Trust unit and financial advisers at Merrill Lynch are eligible for the new share award, said several sources who spoke on condition of anonymity.
Net income at the second largest U.S. bank by assets has jumped 35% in the first three quarters to almost $20 billion, and Moynihan is characterizing the share bounty as a way to glue lower-earning employees to the company.
“This stock award…will further align the role these teammates play with our continued performance and our shareholders’ objectives,” he wrote.
Earlier this month, Bank of America tucked an extra $1,000 into the paychecks of employees who will earn less than $100,000 in 2018.
Moynihan’s memo did not address the cost of the cash awards, how many employees will be eligible for the restricted shares nor the potential dilutive effects of the distribution, but sources said that 95% of the company’s more than 200,000 employees will benefit from the award and grants.
The cash gift matched a similar one made to lower-earning employees last year, when Bank of America and many other companies said they were sharing the bounty from corporate tax cuts that Congress passed in December 2017. Few companies have followed this year with tax bill-related bonuses.
The stock grants, which will be tiered to pay levels, would have been valued at $4,836 to $12,090 per employee based on the $24.18 closing price of Bank of America shares on Wednesday.
Although BofA is off almost 26% from its 52-week high of $33.05 a share, somewhat dulling the award’s panache, several Merrill brokers said that managers want the grants to temper pushback against the firm’s 2019 compensation plan.
In an attempt to reduce expenses that have grown faster than revenue in recent years, Merrill will not pay its almost 15,000 brokers on the first 3% of monthly revenue they generate in 2019 (up to a cap of $4,000) and has raised the number of new accounts and new money they must generate to qualify for their current payout rates.
Advisers at Merrill, as at most of its competitors, receive a percentage of the fees and commissions they generate, with payout ranging from 34% to 50% tiered to their total production. The top rate goes to the few handfuls of advisors producing more than $10 million, but a significant number of brokers would be eligible for the RSUs, the sources said.
Merrill has said that its experienced brokers average about $1 million of annual revenue, but many brokers produce between $650,000 and $850,000 and keep about 40% for themselves (excluding adjustments for hitting or missing growth goals). That payout would put them under the $350,000 compensation cap for the stock awards.
Median U.S. household income as of June 2018 was just over $62,000, according to consulting firm Sentier Research.