Bank of America has hit upon an interesting idea: In these tough times, why not pay a portion of cash bonuses in stock.

For bonuses above $100,000, cash bonuses to be paid immediately will in reality include only 25 percent in cash, with 75 percent in stock that vests immediately. Obviously, recipients could sell the shares immediately, or they could hold on in hopes of stock appreciation.

So what to make of this? It might be seen as a bit gimmicky, but at least no one was paid in toxic assets or various derivatives, as were Credit Suisse bankers.

A DealBreaker commentator, a former Goldman Sachs banker no less, says there are two interpretations. The banks may want to signal that its senior folks are so confident in the bank that they want stock in lieu of cold hard cash because they believe in the upside. So the bank gets to tout that it is aligning employees with shareholders and avoids long-term stock-based incentive plans that wouldn’t go over so well. The move also allows the bank to buffer its capital position a bit, but not much, as employees sell their stock awards.

So will most employees hang on or sell? It really depends on each employee’s financial situation. If you need the money, you may want to play it safe and cash out.

For more:
- here’s the article

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