B of A Rewards Clausen’s Efforts With Hefty Raise
BankAmerica chief A. W. Clausen was well rewarded last year for his role in engineering the financial recovery of California’s biggest banking company.
Figures released Thursday in the company’s proxy statement to shareholders show that Clausen’s cash compensation for 1988 totaled $1.5 million, nearly double what he received the previous year.
The hefty raise made Clausen the highest-paid chief executive among the four biggest California banks.
In addition to the cash compensation, during the past 2 1/2 years Clausen has received rights to buy BankAmerica stock at a price that would have netted him an additional $3.35 million had he exercised the options and sold his stock Thursday.
Tied to Performance
Clausen returned to head the parent of Bank of America in late 1986 when the bank was in deep financial trouble. Since then, the company has made steady improvements and earned $726 million in 1988. Earlier this year, the bank also reinstated its stock dividend.
Clausen’s pay is tied to the improved performance. Of the $1.5 million he received in cash last year, $850,000 was an incentive bonus.
Much of the credit for the turnaround has gone to Bank of America’s resurgence as a consumer bank. Credit for that improvement has gone chiefly to Richard M. Rosenberg, whom Clausen brought in as a vice chairman and head of the California banking division.
Rosenberg’s pay also reflected the success. He received $975,000 in total cash compensation last year, compared to $694,574 in 1987.
Clausen’s 94% pay increase made him slightly higher paid than Richard J. Flamson III, chief executive of Security Pacific, the state’s second-largest banking company. Flamson’s cash compensation in 1988 was $1,439,800, including $740,000 in bonus pay. In 1987, Flamson received $1,009,200, including a bonus of $360,000.
First Interstate in Los Angeles, which sustained a series of setbacks last year and earned only $129.4 million, cut the pay of Joseph J. Pinola, its chief executive. Pinola received $950,916 in 1988, compared to $995,663 in 1987.
At San Francisco-based Wells Fargo, the fourth-largest bank holding company in California and the state’s most profitable, Chairman Carl E. Reichardt was paid $1,330,000 in 1988, up from $1,140,335 in 1987.
When Clausen left BankAmerica’s top job in 1981 to become head of the World Bank, his annual compensation had been $450,000. When he came out of retirement to return to BankAmerica in the fall of 1986, he assumed the $575,000 rate of his predecessor, Samuel H. Armacost.
In 1987, Clausen’s salary remained the same but he received a $200,000 bonus. His 1988 bonus was $850,000 on top of a salary of $650,000, according to figures in the proxy statement.
Since his return, Clausen has been awarded options to buy 305,000 shares of BankAmerica stock at an average cost of $11.66 a share as part of an executive incentive program. So far he has not exercised any portion of the option.
However, if he had exercised the options and sold all 305,000 shares on Thursday, when the stock closed at $22.66, Clausen would have made an average profit of $11 a share or a total of $3.35 million. Such options are frequently used as an incentive for executives.
Clausen has also been given outright 25,000 shares of BankAmerica stock since his return, but he cannot sell that stock until after his retirement. Based on his current pay level, Clausen will receive a pension of $313,256 a year until his death after he retires, the proxy said.
WHAT THEY’RE GETTING Cash compensation for three highest-paid executives at California’s biggest banks. Includes bonuses but does not count stock options and certain other benefits.
1988 1987 BankAmerica A.W. Clausen $1.5 million $775,000 R.M. Rosenberg $975,000 $694,574 F.N. Newman $775,000 $708,333
Security Pacific R.J. Flamson III $1.4 million $1.0 million G.F. Moody $1.0 million $734,800 R.H. Smith $894,800 $602,900
First Interstate J.J. Pinola $950,916 $995,663 E.M. Carson $638,510 $668,625 W.E.B. Siart $538,838 $512,650
Wells Fargo C.E. Reichardt $1.3 million $1.1 million Paul Hazen $945,000 $832,835 W.F. Zuendt $645,000 $564,585
Source: Bank proxy statements
