NYC Comptroller Calls for Executive Clawbacks at Bank of America

NYC Comptroller Brad Lander is calling for Bank of America to initiate a clawback of executive compensation after it was ordered by federal regulators to pay more than $250 million in fines and customer refunds to settle a slew of charges, including double-dipping on overdraft fees, withholding credit card reward bonuses and opening fake accounts.

“We were disturbed to learn that Bank of America has been ordered to pay more than $100 million in customer refunds and $150 million in penalties to federal regulators,” Lander wrote in a letter to the bank’s board of directors. “I believe that the Compensation and Human Capital Committee holds both the responsibility and the authority to promptly initiate the clawback of eligible incentive compensation from the executives responsible (including those in a supervisory role) for the legal violations.”

Earlier this month, the Consumer Financial Protection Bureau ordered Bank of America to pay its customers more than $100 million “for systematically double-dipping on fees imposed on customers with insufficient funds in their account, withholding reward bonuses explicitly promised to credit card customers and misappropriating sensitive personal information to open accounts without customer knowledge or authorization.”

The CFPB also ordered Bank of America to pay $90 million in penalties. At the same time, the Office of the Comptroller of the Currency levied a $60 million civil money penalty against the bank “for violations of law relating to its practice of assessing multiple overdraft and insufficient funds fees against customers for a single transaction.”

Lander’s letter urges the bank to disclose the details of any compensation clawed back from any senior executive; the general circumstances of any compensation clawed back from lower-level employees; and reports from all internal board or company investigations used by the bank to reach its clawback determinations.

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“Instituting a clawback of incentive compensation is a critical accountability measure, and the onus is on the Board of Bank of America to re-establish clear expectations of ethical conduct and responsible business practices,” Lander said in a release.

Representatives for Bank of America had no immediate comment.

Separately, Lander issued a statement criticizing asset management giant BlackRock for appointing Saudi Arabian Oil Co. CEO Amin Nasser to its board.

“The appointment of the CEO of the world’s largest oil producer to BlackRock’s board undermines its own stated climate commitments,” the statement said. “At a time when financial institutions need to take a collective approach to addressing the financial risks from climate change, BlackRock shareholders expect climate-competent, not climate-conflicted, directors.”

Representatives for BlackRock did not immediately respond to a request for comment.

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Tags: Amin Nasser, Bank of America, BlackRock, board, Brad Lander, clawbacks, Comptroller of the Currency, Consumer Financial Protection Bureau, New York City, Saudi Arabian Oil Company

The Teamsters Union representing workers for Yellow Corp. operating companies YRC Freight and Holland has dropped its threat to strike after the Central States Health and Welfare Fund agreed Sunday to extend health care benefits for the workers.

The strike threat came Friday after the pension fund’s trustees voted to suspend health care benefits and cease pension accruals for Yellow Corp. employees after Holland Freight and Yellow Freight failed to make an obligated pension contribution. According to the pension fund, Yellow missed a $50 million payment on July 15 and needed to pay it by July 23. Instead, talks between the Teamsters and the pension fund on Sunday resulted in a 30-day extension of benefits while the pension fund waits for Yellow to make its payment.

“Yellow has failed its workers once again and continues to neglect its responsibilities,” Teamsters General President Sean O’Brien said in a release last week. “This corporation’s gross mismanagement is another affront to the livelihoods and well-being of 22,000 Teamsters nationwide. Following years of worker givebacks, federal loans, and other bailouts, this deadbeat company has only itself to blame for being in this embarrassing position.”

Yellow accused the Teamsters of breaching the collective bargaining agreement that governs the relationship between the two and blamed that breach for Yellow’s inability to make the monthly contribution payments to the Central States funds. According to the company, it wrote to Central States in June requesting a short-term deferral of its obligation to pay contributions for July and August, with interest.

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“Regrettably, the board of trustees of Central States refused Yellow’s request, despite the funds’ healthy reserves,” the company said in a statement, adding that a strike “would be anything but lawful, as it would violate the parties’ collective bargaining agreement.”

Yellow alleges that the Teamsters’ leadership “steadfastly refused to negotiate” the company’s restructuring plans, which the company said is necessary to compete against non-union carriers. The company alleges in a lawsuit it filed against the union last month that the Teamsters’ opposition to the restructuring froze its business plan for nine months, costing it more than $137 million in adjusted EBITDA and prevented critical refinancing.

“Ever since Teamsters’ leadership made its request that Yellow open its contract early, Yellow has tried to meet to negotiate a contract that would provide wage increases for its Teamster employees,” Yellow said in a statement, adding that the alleged obstruction “caused Yellow’s liquidity crisis and Yellow’s need to implement cash-conservation measures, including its benefit funding deferral request.”

Representatives from the International Brotherhood of Teamsters did not immediately respond to a request for comment about Yellow’s accusation that the Teamsters breached the CBA.