BofA Loosens Penalty Boxes

Bank of America Corp. is getting rid of one of its pay cuts for some lower producers, according to reports.

Merrill Lynch had implemented three penalty boxes this year (see “Merrill, Smith Barney Change Broker Compensation). The Wall Street Journal reported that it is now removing the one in which brokers with six or more years’ experience bringing in $200,000 to $299,999 in annual production would receive only a 25% payout, rather than 37% on the regular pay scale. Now that pay cut will apply only to brokers with 10 or more years in business.

The remaining penalty categories cut pay for brokers with six or more years’ experience and less than $200,000 in production and those with 10 or more years doing less than $400,000 in production, according to the news report.

The WSJ noted most firms made their penalty boxes harsher at the beginning of the year in an attempt to weed out long-time lower producers. UBS and Morgan Stanley also brought out tougher penalties this year.

Now the firms are cutting brokers a break. In a similar move, Citigroup Inc.’s Smith Barney is giving its brokers an extra month to increase production levels. It postponed implementation of its penalty guidelines to May 1, The WSJ said.