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Bank of America Corporation’s (BAC) CEO Brian T. Moynihan received a massive pay raise of nearly 73% as per a latest SEC filing by the bank. However, the hike in compensation, which will bring Moynihan’s salary to $12.1 million, is mostly driven by increases in stock-based compensation.

With this increment, Moynihan is likely to become one of the highest paid mega bank CEOs, surpassing JPMorgan Chase & Co. (JPM) CEO Jamie Dimon, whose pay was nearly $11.5 million for 2012, after his bonus was slashed in half following the London Whale trading debacle. However, in terms of base pay, Lloyd Blankfein of The Goldman Sachs Group Inc. (GS) and John Stumpf of Wells Fargo & Company (WFC) were far ahead, pocketing more than $2 million in 2011.

Is Moynihan’s latest pay hike reasonable given the recovery BofA witnessed so far? We think this is well deserved. After all, the man himself engineered the turnaround at BofA. Moynihan took charge as BofA’s CEO after Kenneth Lewis stepped down in 2010. At that juncture, BofA was in severe distress owing to the soured acquisition of Countrywide Financial, colossal mortgage losses, legal mess and a dented reputation.

In the first seventeen months, Moynihan’s performance was not able to make shareholders happy. As a result, the company’s stock prices tumbled to single digit, sounding the warning bell. However, in Jun 2011, Moynihan announced a landmark settlement, marking his first step towards recovery.

The settlement involved payment of $8.5 billion by BofA for its legacy Countrywide Financial Corp to 22 investors who suffered significant losses for their investments in mortgage backed securities (:MBS) that were sold by Countrywide prior to the housing market failure. Though the deal faces lot of opposition, it cannot be denied that if approved, this settlement would resolve majority of investor claims.

Since then Moynihan moves forward. With several legal settlements, cost cutting initiatives and divestment of non-core units, the CEO has single-handedly revived profitability at BofA.

This impressive performance helped Moynihan receive 926,238 shares last year, compared with 761,007 in 2011. Though it is only a 22% jump, the increased stock price contributed to the remainder pay jump. The stock price catapulted around 55% between last year and 2011's grant date. Moynihan’s efforts to pull the bank out of legal mess were the primary driving factors behind stock price appreciation.

Further, in 2012, Moynihan earned a $950,000 in base salary but received no cash bonus, similar to 2011. The stock grants for 2012 totaled $11.1 million at the closing price of $12.03 as of Feb 15, 2013 (day it was awarded). It is expected that the CEO’s base salary is set to increase approximately 55% to nearly $1.5 million this year.

The missing cash bonus is not astonishing for Moynihan. After all, BofA continues its struggle to revive and improvise its earnings and capital profile by divesting non-core business and cost trimming initiatives. Consequently, the bank is not paying its CEO a substantial amount for now.

After having lowered the compensation in 2010 to $1.94 million, the recent pay hike is well deserved by Moynihan. Though a lot remains to be accomplished and we do not doubt the capacities of the CEO, this compensation hike will prove a morale booster for him.

Currently, BofA carries Zacks Rank #3 (Hold).