B of A chief’s salary has no limits

Paul Nowell

Thursday, April 29, 1999 | 11:14 a.m.

CHARLOTTE, N.C. -- Bank of America Chairman Hugh McColl earned a smaller bonus in 1998 because of losses from a hedge fund and Russian bonds, but shareholders rejected a bid to cap his pay permanently.

At the company's annual meeting Wednesday, activists proposed limiting McColl's total compensation, as well as preventing future severance packages like the one given to former chief executive David Coulter. Shareholders overwhelming rejected both proposals.

Coulter, 51, was president of the newly merged Bank of America for a month before he resigned under pressure last fall. His departure came after the disclosure that the bank lost $372 million because of the old BankAmerica's partnership with D.E. Shaw, which was using complex computer-driven strategies to invest in derivatives and bond trading strategies.

Coulter departed with 300,000 shares of bank stock and a $5 million annual pension for life.

One of the proposals Wednesday would have limited any future severance packages to no more than $3 million without a vote by shareholders. Another would have limited the ratio between the salaries of Bank of America's top executives and its lowest-paid workers.

"Some Bank of America executives leave with an envelope containing a six-figure parting gift while thousands of employees are handed envelopes with pink slips," said Kristin Barrali, a member of United for a Fair Economy, a Boston-based advocacy group.

"Executive compensation is out of control," she told McColl, who promised to consider it.

"We don't take lightly what you say," he said.

However, in the company's proxy statement, the bank's management urged shareholders to reject the proposal, saying it was "contrary to the corporation's pay-for-performance compensation policies."

In 1997, McColl's bonus from NationsBank was $3.5 million, accounting for more than two-thirds of his total compensation of $4.64 million. His 1998 bonus was $2.5 million.

Last year, McColl told the bank's senior management he should bear responsibility for Bank of America's losses when it came time to hand out bonuses.

More than 30 investor lawsuits have been filed against Bank of America over the Shaw losses.

The losses prompted the resignation of Coulter, the old BankAmerica chairman and CEO who was to be president of the combined bank and was widely regarded as McColl's eventual successor.

Shareholders also voted to change the name of the bank holding company to Bank of America Corp.

In his remarks, McColl said the bank was moving quickly to replace all old BankAmerica and NationsBank signs and symbols with the bank's new logo.

"Day One in Texas and New Mexico took place earlier this month, and was a huge success," he said. "In July, we will convert all operations in the Carolinas, Arizona and Nevada, as well as our retail brokerage group."

The bank's disappointing earnings for the second half of 1998 should not be repeated in the near future, he said.

"We have taken appropriate steps to minimize future trading losses. Our relationship with Shaw has been restructured," McColl said. "And the first quarter earnings we reported last week beat Wall Street estimates by a healthy margin."

On April 19, the company reported a 44 percent increase in net income for the first quarter, with per-share profits rising to $1.08 this year from 75 cents during the same quarter a year ago.

Chief financial officer James Hance Jr. laid out the company's long-term goals for shareholders, including growth in earnings per share in the 12 percent to 15 percent range and return on equity between 17 percent and 21 percent.

"We're real, real bullish on the future of this company," McColl said before adjourning the meeting.

B of A is Nevada's largest bank.

"Some Bank of America executives leave with an envelope containing a six-figure parting gift while thousands of employees are handed envelopes with pink slips."Kristin BarraliUNITED FOR A FAIR ECONOMY