TEXT OF STORY
Steve Chiotakis: It is a big day for Bank of America. The company is expected to report earnings in about an hour. Yesterday, B of A’s outgoing CEO, Ken Lewis, succumbed to pressure from the pay czar, and agreed to forgo this year’s salary and bonus. Let’s bring in Marketplace’s Steve Henn for more. He joins us live from Washington. Good morning Steve.
Steve Henn: Good morning.
Chiotakis: So what’s the pay czar decided to do here?
Henn: Well Steve, he’s forcing Ken Lewis to give back about a million dollars in compensation Lewis has already earned. And Lewis is agreeing to forgo $1.5 million he expected to get for the remainder of the year.
Chiotakis: So if Lewis is going to leave at the end year, shouldn’t we really be paying attention to the golden parachute?
Henn: Well absolutely. Lewis is in line for a $50 million pension, plus millions more for comp in stock. When you add it all up he’ll still walk away with more than $69 million.
Chiotakis: And why is he coming under the microscope, Steve? He’s not the first bank executive to resign?
Henn: Well yeah. Lewis has been under a sustained attack for months. His decision to push ahead with Bank of America’s purchase of Merrill late last year. Even after he knew Merrill’s losses were huge. Well enraged shareholders, so the fact that Lewis would end up as the pay czar’s first target isn’t a huge surprise.
Chiotakis: And what’s the reaction to this been?
Henn: Well forcing someone to give back money they’ve already earned is a pretty aggressive opening move. And the fact that Lewis agreed to go along with this relatively quietly has to strike fear into the hearts of CEOs, who are also having their pay packages looked at by Ken Feinberg.
Chiotakis: All right. Marketplace’s Steve Henn joining us from Washington. Steve thanks.
Henn: Sure thing.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.