What a difference a few weeks have made for Bruce Hammonds, the chief executive officer of MBNA Corp.
On a Friday afternoon last month, he was plucked from the waters off of Manhattan after a helicopter carrying Hammonds and five other senior executives of MBNA crashed into the East River. Now the CEO stands to earn more than $125 million after he completes his deal to sell the credit-card giant to Bank of America Corp., according to The Wall Street Journal, which cited a compensation expert and the company’s regulatory filings.
Hammonds will also serve as head of Bank of America’s credit-card and debit-card operations. The transaction is expected to close in the fourth quarter.
A large portion of the payout would be due to the restricted stock awarded to the company’s top executives over the years. The stock has a 10-year vesting period, but it would vest immediately if there is a change of control at MBNA, reported the Journal. Hammonds held $56 million of restricted stock at the end of 2004, added the paper, citing the company’s most recent proxy. Most of the rest of his compensation package stems from stock options that can be exercised upon a change of control.
Paul Hodgson, a senior research associate at the Corporate Library, told the Journal that a big portion of the compensation package dates back to a time before the company consciously improved its corporate governance practices.
Since Hammonds became CEO in late 2003, the paper pointed out, he has reduced the granting of restricted stock and options and has dramatically reduced perks at the company. He also froze executive salaries, sold the corporate golf course, and reportedly vowed to make the company “look less flamboyant.”