Bank of America will book a $400 million expense in the first quarter to account for a change in bonus policies that sparked anger among high earners.
“In January, we made a change in one element of a portion of our incentive comp paid in 2020,” Chief Financial Officer Paul Donofrio said at a Credit Suisse Group virtual conference Friday. The alteration will shift into this quarter costs “that would have been incurred anyway over the next four years, so it’s just an acceleration in Q1.”
In January, Bank of America scrapped a proposed bonus policy for high-earning traders and dealmakers after it caused consternation. The change would have forced some long-tenured staff eligible for retirement to forfeit a major portion of their 2020 bonus. It was eventually waived for some company veterans, but kept in place for others,
Donofrio also said at the conference that the bank expects declining loan levels to be a drag on net interest income, or revenue from customer loan payments minus what the company pays depositors, this quarter.
“It puts more pressure on the near-term NII, but not as much on the full year, assuming we see some loan growth turn around” in the second half, Donofrio said. Still, “we expect the second half of ’21 should be demonstrably better than both the first half of ’21 and the second half of 2020.”
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