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Moynihan braces for 1st annual meeting

Bank of America chief to face investors upset over pay policies, losses

Bank of America chief Brian Moynihan. Bank of America chief Brian Moynihan.
By Beth Healy
Globe Staff / March 18, 2010

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With Bank of America Corp.’s annual meeting six weeks away, new chief executive Brian Moynihan will face his first joust with dissident shareholders upset with the banking behemoth’s compensation polices.

The April 28 meeting in Charlotte, N.C., will be the first without former chief executive Kenneth Lewis, who spent his career at the bank and its predecessor companies. Instead Moynihan, a lawyer from Wellesley, will be running the show, and he has already issued a mea culpa of sorts to shareholders still upset over the two tumultuous years just ending.

In a letter to shareholders in the company’s annual report that was posted online yesterday, Moynihan acknowledged Bank of America had “missed the mark’’ during the financial crisis, a period when the company absorbed steep losses from bad loans, underestimated the depth of problems at the investment bank it bought, Merrill Lynch & Co., and received $45 billion in government funds.

“Before and during the recent crisis, many of our collective business judgments missed the mark. We believe the changes we’re making now will put us in a much better position to see and respond to macroeconomic risks in the future,’’ Moynihan wrote.

He also said the company has changed its compensation practices to “more closely align pay with long-term performance and enable the company to recover funds when risks go bad.’’

Those compensation practices will be before shareholders in Charlotte next month. One voting matter comes from a union-based investment group. It requests the company “claw back’’ any compensation to executives that later was found to have been awarded on financial performance that was either unsustainable or needed to be reversed. A second shareholder proposal would give investors a yearly voice in approving executive compensation plans.

Bank of America’s board recommended shareholders vote against both those measures, saying it has separately put its compensation policies before shareholders for a nonbinding approval, and that those policies already include clawback provisions.

Shareholders have fresh information on the bank’s compensation to officers with which to weigh these policy matters. In recently filed regulatory statements, Bank of America disclosed that Lewis leaves the company with $57 million in pension plans and more than $11 million in other retirement and deferred compensation.

Moynihan received $6.5 million in total compensation last year, while a Merrill Lynch executive in charge of the merged company’s global banking and markets, Thomas K. Montag, received nearly $30 million.

Also the company disclosed that director and former chairman Charles “Chad’’ Gifford received nearly $1.8 million in pay and private jet travel last year.

That included $956,007 for aircraft use and $238,155 for office space and administrative support.

As previously reported, the board of directors decided not to renew Gifford’s jet privileges.

The bank will continue to provide Gifford with an office and secretarial staff. Gifford received these perks under a five-year agreement he made when he retired in 2005.

Gifford, 67, was chairman of the merged Bank of America Corp. after its 2004 acquisition of FleetBoston Financial.

He was also a member of the search committee that recommended Moynihan succeed Lewis.

Beth Healy can be reached at bhealy@globe.com.