CHICAGO (Reuters) - Bank of America Corp’s search for a new chief executive has been hurt by federal pay limits that played a major role in the senior vice chairman of PNC Financial Services Group Inc spurning feelers from the company, the Wall Street Journal reported on Saturday.
PNC’s William Demchak rejected a feeler from a recruiter for Bank of America last week, and the required approval of U.S. government pay czar Kenneth Feinberg for any compensation package was a major factor in the decision, the paper said, citing a person familiar with the situation.
The bank, which borrowed $45 billion from the government, would “get blasted” for buying out Demchak’s PNC shares, the unidentified source told the Journal. Demchak also did not see Bank of America’s situation as fixable given the government’s heavy influence, the paper said.
Feinberg declined to comment to the Journal, which also could not reach Bank of America Chairman Walter Massey.
Bank of America has argued the added regulation, like the pay czar’s compensation limits, hurts its ability to compete with other financial firms.
Those limits are expected to be in place for any successor to Kenneth Lewis, who is scheduled to retire at year end and gave up his 2009 salary and bonus at Feinberg’s request.
Other high-profile external candidates linked to the job — like Bank of New York Mellon’s CEO Bob Kelly and BlackRock CEO Laurence Fink — have either declined the post or denied interest to begin with. At least two internal candidates have expressed interest, according to reports.
Bank of America’s next chief faces a bevy of operational, regulatory and political challenges.
The bank is struggling to stem real estate and consumer credit losses while integrating two large businesses, mortgage lender Countrywide Financial and brokerage Merrill Lynch & Co.
On top of that, government regulators have issued a secret regulatory oversight agreement that overhauled Bank of America’s board and mandated pay cuts for some top employees.
The bank’s credit problems are the key to relieving the pressure of government involvement, analysts have said. Once the bank’s loan book stabilizes, it can start to pay back the money it borrowed from the U.S. government, which came with some serious strings attached including Feinberg’s control of compensation for top executives.
Reporting by Ben Klayman, editing by Vicki Allen