Bank of America May Give Stock Bonuses to Close Gap

Bank of America, short on cash and rushing to pay back a TARP loan, may have to pay employee bonuses in stock, reports said over the weekend. (Mario Tama/Getty Images)

Bank of America may have to pay some of its employees’ bonuses in stock as it may have a shortfall in capital by the end of the year that it promised to pay back, according to Dow Jones and Bloomberg News.

The company’s regulator filing noted that the company is still $1.1 billion short by the end of the year.

Initially, Bank of America said they would pay back $4 billion by June 30, but the deadline was pushed back to Dec. 31 and the sum owed was lowered to $3 billion.

In the Friday filing, the bank “must raise a commensurate amount of common equity” if their asset sales don’t bring in the $1.1 billion, according to Bloomberg News.

The Charlotte-based bank sold part of its BlackRock Inc. stake last week, potentially raising more than $7 billion, but not enough to fill the gap in capital, according to Dow Jones.

If the company can’t raise the funds, some of the company’s 280,000 employees may get stock bonuses to close the gap, according to Bloomberg.

“They are going to meet their commitment and if they have to, they’ll do it through their employees,” Mark Borges, a consultant at Compensia Inc., told Bloomberg. “Given the size of the compensation pool, they may be able to meet the entire requirement by selling stock to insiders rather than outsiders.”