Shareholders Expected to Question Pay for B of A CEO

CHARLOTTE, N.C. —  Hugh McColl Jr.’s generous compensation package probably will come up Tuesday when shareholders gather for Bank of America Corp.’s annual meeting.

Shareholders are likely to challenge McColl, the bank’s chairman and chief executive, whose 1999 package included nearly $45 million in stock, over whether he deserved the pay during a tough year for the bank’s stock price. The price fell 17% last year, when the S&P; Money Center Banks index fell about 15%.

“There’s certainly going to be some comments,” said Graef Crystal, a consultant who tracks executive pay. “There’s already a lot of animosity in California because they took this prized symbol and moved it to North Carolina.”

In addition, McColl’s 1999 salary and bonus totaled $3.75 million, up 7.1% from the year before.

McColl, 64, received stock worth $44.7 million in July, when Bank of America’s stock price was $74.50. Restrictions on the stock expire three years from the July grant date. At that time McColl will own the stock fully. He also received options to buy 1.4 million shares of stock at $74.50. The options were valued in the bank’s proxy statement at $27.2 million.

The options’ actual value depends on stock performance and will almost certainly be different from the proxy estimate. McColl also won’t realize the options’ full value, if any, until he chooses to buy the stock.

The bank’s proxy said directors granted the options and the stock to reward McColl for helping build the bank that became No. 1 in the U.S. with the 1998 merger of Charlotte-based NationsBank and San Francisco-based BankAmerica.

Meanwhile, the California Public Employees Retirement System plans to withhold its 9.6 million votes from four Bank of America directors--Solomon Trujillo, Alan Dickson, Paul Fulton and Meredith Spangler. All are members of the bank’s compensation committee.

The pension fund, also known as CalPERS, said on its Web site that McColl shouldn’t have received such hefty pay when the bank had “a 16% earnings shortfall and a stringent bank cost-cutting program, including 19,000 layoffs.” The bank would not comment on CalPERS’ action.

Bank spokesman Bob Stickler said he was sure bank officials would be asked about McColl’s pay package and the price and performance of the company’s stock.

“I think the major message is going to be that we have a strategy that we think will be quite successful. That strategy in a nutshell is to create more valuable customer relationships,” Stickler said.

“I think we’re going to talk about the issue of our stock price, why we think it is where it is and what we should be doing to get a higher stock price in the future.”

Bank of America on Monday reported first-quarter operating income of $2.24 billion, or $1.33 a share, up 17% from a year before. Its stock closed Thursday at $49.56, up 13 cents, on the New York Stock Exchange.