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CNBC Reporter
Embattled Bank of America CEO Ken Lewis agreed to give up his $1.5 million salary and other compensation for 2009. Lewis will repay the bank the more than $1 million that's been paid to him so far this year.
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AP |
Bank of America [BAC
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] spokesman Bob Sticker told CNBC, "Mr. Feinberg suggested Mr. Lewis should take no compensation for 2009. Mr. Lewis agreed. Mr. Lewis added it was not in the best interest of Bank of America to get into a dispute with the pay master."
This was the first time the pay czar Kenneth Feinberg's "suggestion" about compensation has resulted in a clawback.
People close to Lewis said the decision to give up all of this year's salary was voluntary as the bank did not believe Feinberg had the authority to suggest a clawback for the entire year's pay. As the Special Master of Compensation, Feinberg's power is limited over contracts signed before February 11, 2009.
Lewis has been under fire from regulators and Congress since Bank of America merged with Merrrill Lynch in January. A number of probes are looking into whether he withheld material information from shareholders about the deal. Lewis claimed he acted on advice of counsel.
Lewis, who said just weeks ago he will step down at the end of the year, received no bonus in 2008. He did receive a salary of $1.5 million dollars.
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A source close to Feinberg said the pay czar's taking no position on Lewis's retirement package as it is grandfathered, though they did say he could always issue an advisory on that pay. Lewis' retirement benefits are estimated to be in excess of $60 million dollars.
As the special master of compensation, Feinberg's task is to approve the pay packages of the top 25 executives at the seven companies that have received extraordinary assistance from the U.S. government.
Bank of America is one of the seven companies, having received $45 billion in loans from the government. Feinberg's report on these compensation plans is due by October 30th.
Feinberg declined comment.
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