Pay czar's cuts hurt BofA's recruiting, retention

A man walks near a Bank of America branch in New York's Times Square Decemeber 11, 2008.

CHARLOTTE, North Carolina (Reuters) - Bank of America Corp said on Thursday the pay limits instituted by the U.S. government's pay czar hamstring the bank in keeping and recruiting talented executives.

"People want to work here, but they want to be paid fairly," said Scott Silvestri, a Bank of America spokesman.

U.S. pay czar Kenneth Feinberg announced Thursday pay guidelines that curbed cash compensation by 90 percent for the 25 most highly paid executives at seven companies that received extraordinary government assistance in the financial crisis.

Bank of America received $45 billion from the government in the last year, which it has publicly stated it wishes to repay as soon as possible.

Silvestri said competitors not subject to the pay restrictions are already identifying Bank of America's top performers and using additional pay as a recruiting tool to lure them away.

The bank's executive cash pay was cut by an average of 94 percent, according to Feinberg, second only to Citigroup's 96 percent cutback. Bank of America's total executive compensation was cut by 62 percent.

Silvestri said the bank's own analysis indicates many of the executives could make double, or more, at other companies.

Chief Executive Ken Lewis has already foregone any pay or bonuses in his last year as Bank of America's CEO. Lewis will retire at year's end, and a successor has not yet been named.

Feinberg said any compensation decisions about the new CEO will need to be cleared with him first.

Bank of America shares closed largely unchanged on the day, up 0.06 percent at $16.52, lagging a 3.35 percent gain by the KBW Bank Index.

(Reporting by Joe Rauch, editing by Matthew Lewis)