NEW YORK Bank of America Corp said it has agreed to pay $28 million to Countrywide Financial Corp Chief Operating Officer David Sambol to induce him to run the merged companies' consumer mortgage operations.
The amount, which vests over three years, is 37 percent higher than the $20.4 million that Bank of America Chairman and Chief Executive Kenneth Lewis was compensated in 2007 to run the second-largest U.S. bank.
Bank of America disclosed the amount in a Thursday filing with the U.S. Securities and Exchange Commission.
Sambol, who is also Countrywide's president, was named in January to run the mortgage business after Charlotte, North Carolina-based Bank of America completes its purchase of the largest U.S. mortgage lender. That transaction was valued Thursday at about $4.1 billion.
According to the filing, Sambol would be entitled to a $20 million retention bonus payable in equal installments on the first and second anniversaries of the merger, which is expected to close in the third quarter.
Sambol would also receive $8 million of restricted stock, vesting in three installments on the first, second and third anniversaries of the merger, the filing shows.
Awards replace cash severance payments to which Sambol would be entitled at Calabasas, California-based Countrywide, according to the filing.
Sambol would also be entitled at Bank of America to a $500,000 annual base salary, an annual incentive award targeted at $4 million, and an annual equity award targeted at 150,000 Bank of America options.
Bank of America was not immediately available for comment.
The U.S. Federal Reserve plans to hold public hearings on April 22 in Chicago and on April 28 and 29 in Los Angeles on the Countrywide takeover. The combined company would make about one in four U.S. home loans.
Some consumer groups have criticized Bank of America for not doing more to help troubled borrowers. Consumer groups, borrowers, lawyers and politicians have faulted Countrywide for lending excesses they say fueled the nation's housing crisis.
Sambol has also received criticism over his role at Countrywide. Lewis, however, has praised Countrywide for its management expertise.
Bank of America agreed to issue 0.1822 of a share for each Countrywide share. The merger values Countrywide at about $7.04 per share, based on Bank of America's Thursday closing price of $38.64. Countrywide shares closed Thursday at $5.88.
(Editing by Michael Urquhart)