Sallie Krawcheck, who was forced out of Bank of America-Merrill Lynch in early September as part of the bank’s reorganization, is getting more than $6 million in severance pay, one-time payments and other benefits, according to documents filed with the SEC. The package details were filed on Oct. 6, exactly one month after Krawcheck’s role as head of the wealth-management operations ended.
Joe Price, another top BofA executive who was fired on Sept. 6, is getting about $5 million. Krawcheck is getting a lump sum of $5.15 million, while Price is set to receive a lump sum of $4.15 million. They both will get payments totaling $850,000 over the next 12 months, along with health-care benefits, employment and tax-preparation services, according to the Securities and Exchange Commission documents.
“The deal is a win-win overall” for the two parties, said Rick Peterson, head of the recruiting firm Rick Peterson & Associates in Houston, in an interview with AdvisorOne. “It makes sense–both the overall package and the noncompete clause that’s part of the deal. To get her to sign this, the deal had to be lucrative, as this one is.”
“In consideration of Ms. Krawcheck’s and Mr. Price’s releases of claims and agreements to these restrictive covenants, the Agreements provide that each of Ms. Krawcheck and Mr. Price will receive: installment payments equal to 52 weeks of their regular base salary, or $850,000, in each case, and group health coverage benefits and outplacement services for the period they receive the installment payments,” according to the 8-K filing.
“In addition, Ms. Krawcheck’s Agreement provides that she will receive a one-time, supplemental lump sum payment of $5,150,000 and Mr. Price’s Agreement provides that he will receive a one-time, supplemental lump sum payment of $4,150,000, in each case payable by the registrant one year following Ms. Krawcheck’s and Mr. Price’s separation date [Sept. 6],” the document continued.
The agreements stipulate that Krawcheck and Price will receive no bonuses or other incentive-pay compensation.
Krawcheck, who waived her right to sue BofA over loss of employment, pledged to provide transitional and consulting services to the bank over the next year. She also agreed to a noncompete clause that keeps her from working for direct rivals as well as for any wealth-management firm while receiving the monthly severance payments.
“In exchange for the consideration provided hereunder … I further agree … I will not engage directly or indirectly in … providing services in any capacity (including as director, officer, employee, partner, owner, consultant, or advisor) for or on behalf of any business engaged in wealth financial advisor management,” Krawcheck’s agreement states.
Krawcheck was privy to trade secrets and expansion plans at BofA and Merrill, says Peterson, along with the operational liabilities and vulnerabilities of the firm. “She could capitalize on that as CEO or part of another firm,” explained Peterson.
The wealth-management executive, who was hired by BofA-Merrill in 2009 after previous leadership posts at Citi and Sanford Bernstein, is set to speak on Nov. 7 in New York at a financial-services conference hosted by SIFMA.