Wall Street signI don’t often write about financial topics but last week something caught my attention. Brian Moynihan, Bank of America CEO, received his compensation reward for 2012. Does a 73% pay increase sound a trifle out of line?

Let’s look at some details.

It Was a Very Good Year

From a performance stand point, BAC shares doubled in value last year. That is mighty good news for the shareholders. And, good news for Mr. Moynihan. With a base salary of $950,000, he was granted $11.1 M  in restricted shares for 2012. Doing the arithmetic, that adds up to just over $12 M which places Mr. Moynihan somewhere in the middle of the pack for bank CEO compensation.

According to Forbes, the stocks granted to Mr. Moynihan shouldn’t be considered a pay increase because stock units vest over time, in this case, some starting in just one month from granting with an end date of 12/31/15. The real value of the stock remains to be determined. But what is interesting is that half of the stocks granted him vest by time only … without any performance goals.

Not exactly the formula for a long-term strategy. But, this seems to work in banking.

Apply This Reward System Elsewhere

What if a school superintendent doubled the number of students in their community who scored in the top 10% ranking of MCAS? Would you consider giving that person a 73% increase in compensation if that measurement was sustained over the course of three years?

How would you reward a chief of police who significantly reduced the number of violent crimes for three years? Does 73% feel like a good number for a pay raise?

Would you consider a 73% pay increase for an Executive Director who doubled donations and managed that growth over three years?

Unequal Comparison

Yes, I made the non-banking sectors responsible for sustained growth and that was not the case for one half of Mr. Moynihan’s stock award.

But seriously, as a tax payer, would you consider a 73% salary increase for an administrator in your city or town if he/she attained some highly measurable goal akin to doubling stock value?

What’s Wrong With This Picture?

Looking at the compensation for our banking industry CEOs and then examining the compensation for our public servants, why do we create a different standard of reward?

You might argue that CEOs are responsible for a whole lot of money which is true.

And our educators are responsible for instilling critical thinking skills in the minds of the next generation. And our police are responsible for saving lives and property.

How valuable is a young mind? How valuable is a life?

Somehow, the arithmetic just doesn’t add up.

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