WASHINGTON — Kenneth Lewis, outgoing chief executive of Bank of America Corp., will get no salary or bonus for 2009, according to people familiar with the matter, the biggest Wall Street name thus far to come under the thumb of the government's pay czar.
In fact, Lewis will have to repay the North Carolina-based bank more than $1 million in salary he has already earned.
The move was demanded by Kenneth Feinberg, the U.S. Treasury Department's special master for compensation, and was agreed to by Lewis and the bank. Feinberg's rationale is based largely on the fact that Lewis will leave the firm with a package of retirement benefits and other stock awards worth between $69.3 million and $120 million, these people said.
A Bank of America spokesman said Lewis voluntarily agreed to the deal, which was finalized Thursday.
"Mr. Feinberg suggested that Ken Lewis should take no compensation for 2009. Mr. Lewis agreed. Mr. Lewis added that he felt it was not in the best interest of Bank of America for him to get involved in a dispute with the paymaster," the spokesman said.
The move will stun Wall Street, which has been anxiously awaiting Feinberg's rulings on compensation at seven firms receiving large sums of government aid, including also Citigroup Inc. and General Motors. Feinberg had been expected to clamp down on compensation by cutting salaries for the most highly-paid employees at these firms. But until now there's been little indication he would take away an employee's entire pay.
For Lewis, the move bookends the rapid fall of an executive once heralded as one of America's top bankers. Less than a year ago, he was hailed for helping avert financial disaster by snapping up teetering mortgage giant Countrywide and rescuing investment bank Merrill Lynch. Lewis's fortunes soon turned as he was forced into the government's arms to help his bank digest Merrill Lynch and eventually stripped of his chairman title by angry bank shareholders.
Feinberg doesn't have the authority to adjust compensation awarded before 2009, which would include Lewis's retirement package and the various stock holdings amassed during a four-decade career at the bank.
But the pay czar didn't want the CEO to take any more money, and used his leverage over pay instead, people familiar with the matter say. Lewis' base salary for 2009 is $1.5 million.