BofA's (BAC) Moynihan Nixes Broker Pay Cut Plan; Thinks Competitiveness Will Suffer

December 20, 2012 11:32 AM EST
Bank of America Corp. (NYSE: BAC) is stronger once again today, a reoccurring theme with the bank, as investors appreciate new action by CEO Brian Moynihan in efforts to maintain competitiveness.

Late Wednesday, headlines popped up that Moynihan vetoed a move by the Board to trim Merrill Lynch brokers' grid payout by about 2 points in an effort to offset the costs of bonuses. The grid payout scheme accounts for most of brokers' pay and is what keeps Bank of America competitive in terms of retaining talent and attracting more from other firms, instead of the opposite scenario happening.

The cut would have affected brokers generating less than $1 million in commissions annually, Bloomberg noted this morning, or about two-thirds of Merrill brokers.

BfoA's grid is a sliding scale that determines the percent of gross revs a broker would retain as compensation. More revs equals higher payout.

Merrill Lynch was acquired by BofA back in 2009 following the financial mess that threatened to put the venerable Wall Street firm under (ala - Lehman Bros.). Profit in the branch, which Moynihan now sees as a key component of the overall BofA scheme, rose 50 percent in the latest quarter to $542 million, according to Bloomberg-compiled data. Moynihan noted that there were plenty of cross-selling opportunities at Merrill and vice versa.

Shares of BofA are up 1.7 percent on the session.

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