2009 hasn't been kind to Ken Lewis, the soon-to-retire CEO of the Bank of America. He's been forced to endure endless unkind and mocking admonishments from elected legislators, been made into a symbol for all that's wrong with the American financial system, and watched helplessly as the gargantuan bank that he helped assemble over 30 years became a national laughingstock. Now, supposedly, comes the unkindest cut of all. Kenneth Feinberg, the White House's "pay czar," has decided that Lewis must forgo his 2009 salary and bonus -- he will even have to pay back the $1 million or so he has already earned this year
Wall Street, the Wall Street Journal tells us, is shocked and appalled.
The move will stun Wall Street, which has been anxiously awaiting Mr. Feinberg's rulings on compensation at seven firms receiving large sums of government aid, including also Citigroup Inc. and General Motors. Mr. 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.
Wall Street protests too much. If we're talking 2008, OK, maybe this kind of pay cut would hurt -- Lewis' total compensation in 2008 was $24.8 million. But Ken Lewis' base salary for 2009? A paltry $1.5 million. And you had to figure he was unlikely to be awarding himself a very large bonus for his performance this year.
Ken Lewis' pension plan, however, which will remain intact, is worth $53.2 million. The Journal estimates that altogether, Lewis has waiting for him "a package of retirement benefits and other stock awards worth between $69.3 million and $120 million."
So please, no Wall Street pity parties for Ken Lewis. He'll be just fine.
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