November 26, 2008
Don’t Mess with Cuomo: BofA Subpoenaed for Pay Information
– Broc Romanek, CompensationStandards.com
Recently, New York Attorney General Andrew Cuomo subpoenaed Bank of America, demanding a list of every executive that received a bonus of more than $250,000 over the past two years. The subpoena is part of the AG’s investigation into bonuses paid out to banking executives during the run-up to the industry’s meltdown.
Last month, Cuomo’s office asked nine banks (including BofA) to voluntarily turn over information on executive pay and bonuses, as well as plans for awarding bonuses in 2008. All nine banks sent at least some information, but apparently Cuomo’s office wasn’t satisfied with BofA’s response, which included little of the data sought. Among other things, the subpoena seeks information about how the company awards bonuses, who makes the decisions, who gets them and the size of the anticipated bonuses for 2008.
Cuomo and AIG
Also notable is that Cuomo wrote AIG’s board last month demanding that the company recover bonuses and the cost of other perks from current and former executives – and AIG freezed some payments. According to this article in the NY Times, New York law allows creditors to challenge company payments for which value was not received in return. Some believe that if the Attorney General is successful in his pursuit of AIG, other creditors may use it to pursue other firms such as Lehman Brothers.
And Cuomo’s strategy seems to have worked. On Monday, AIG issued this press release indicating that AIG’s CEO will receive a $1 salary and no annual bonuses through ’09. In addition, AIG’s next top six executives will not get year-end bonuses. Here is AIG’s letter responding to Cuomo’s letter. Mark blogged about this development last night…