Bank of America CEO Brian Moynihan will be required to hold millions of dollars’ worth of shares for a minimum of one year after he retires as part of a new compensation policy implemented by the bank.
The new policy, which was instituted following investor pressure that executive compensation be tied more to a company’s long-term performance, is aimed at providing incentive to executives to avoid risks that could have a significant impact later on. The new policy also requires other top executives to hold a minimum number of shares at least until retirement, Fox Business reports.
“A step in the right direction is better than the status quo,” John Chevedden, an acitivist shareholder who pushed for the change, said, according to Fox Business.
Before the new policy, Moynihan would have only been required to hold at least 500,000 shares of company stock until retirement and retain “at least 50 percent of the net after-tax shares from future equity awards,” however, under the new policy, the holding period was changed from “until retirement” to “until one year following retirement.”
Additionally, other top executives were required to hold at least 300,000 shares of company stock in addition to half of their after-tax award shares, and the new policy adds “until retirement” to this requirement, Fox Business reports.