2020/2/25 下午9:50Wall Street Chiefs’ Pay Doesn’t Sync With Returns – WSJ
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Wall Street companies delivered significant losses to their shareholders last year, but the pain
didn’t spread to the top.
The chiefs of banking and financial institutions in the S&P 500 received a median raise of 8.5%
last year, compared with 5.6% for CEOs in the broader index, according to a Wall Street Journal
analysis.
Meanwhile, firms in the sector posted a median total shareholder return—or stock-price
changes plus dividends—of negative 17% in 2018, while the median return for the index as a
whole was negative 5.8%.
Median pay for finance CEOs was $11.4 million for the year, $1 million below the overall S&P 500
median. The Journal analysis uses total compensation as specified by Securities and Exchange
Commission regulations, which includes salary, annual bonuses, and long-term equity and cash
incentives. It also includes perquisites and the value of pension gains and some increases in
deferred compensation accounts.
Jefferies Financial Group Inc. Chief Executive Richard Handler’s total pay package more than
doubled to $44.7 million, more than any other banking and finance CEO and fourth highest
among all S&P 500 chiefs. Jefferies, one of the industry group’s smallest companies, posted a
total shareholder return of negative 14.9% for the year.
Mr. Handler’s pay consisted of $26 million in stock awards available to him in future years only
if performance measures are achieved, Jefferies said in its proxy filing, with the remaining $18.7
million reflecting 2018 pay. The company said in the filing that it didn’t intend to make
additional equity awards in 2019 and 2020. Jefferies declined to comment further.
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https://www.wsj.com/articles/wall-street-chiefs-pay-doesnt-sync-with-returns-11562580018
BUSINESS
Wall Street Chiefs’ Pay Doesn’t Sync With
Returns
Banks and financial companies delivered sharply negative shareholder returns in 2018, but most of the
top-paid Wall Street chiefs got big raises
James Dimon, CEO of JPMorgan Chase, was paid $30 million total last year. Much of Mr. Dimon’s
pay was made up of stock awards valued by the company at $23 million—a figure that could rise
to as much as $34.5 million if JPMorgan reaches maximum performance targets in the coming
years.
PHOTO: GIULIA MARCHI/BLOOMBERG NEWS
Updated July 8, 2019 6:57 pm ET
By Charlie McGee
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2020/2/25 下午9:50Wall Street Chiefs’ Pay Doesn’t Sync With Returns – WSJ
⻚码：2/3https://www.wsj.com/articles/wall-street-chiefs-pay-doesnt-sync-with-returns-11562580018?mod=searchresults&page=1&pos=1
JPMorgan Chase & Co. paid James Dimon $30
million total last year, up from $28.3 million
the year before and making him the group’s
second top-paid chief. Meanwhile, JPMorgan,
the nation’s largest bank by market
capitalization, closed the year with a negative
6.7% total shareholder return.
Much of Mr. Dimon’s pay was made up of stock
awards valued by the company at $23 million—
a figure that could rise to as much as $34.5
million if JPMorgan reaches maximum
performance targets in the coming years, according to its proxy filing. JPMorgan declined to
comment.
James Gorman of Morgan Stanley, the largest capital-markets firm by market cap at the year’s
close, received $28.2 million, a 14.9% pay increase that made him the group’s third highest-paid
chief. Mr. Gorman’s raise came as Morgan Stanley posted a negative 22.8% total shareholder
return. The company declined to comment.
Federal financial regulators are considering finalizing rules, first adopted with the 2010
financial overhaul, that would require big banks to postpone more pay for top executives, with
provisions to rescind it in the event of later losses at the companies, the Journal reported
earlier this year.
Timothy
Sloan,
Wells Fargo
& Co.’s CEO
until he
stepped
down earlier this year, received a raise of 4.9% to $18.4 million. His pay package was lifted by a
$2 million performance-based cash bonus, as he did not receive any such bonus in 2017.
Wells Fargo’s total shareholder return was negative 21.8% last year as revenue declined in all
three of its businesses—consumer banking, wholesale banking and wealth management. A
Wells Fargo spokeswoman referred to a section of the bank’s proxy that states that 76% of Mr.
Sloan’s compensation came in equity based on the company’s performance over the long term.
Several factors likely contributed to the combination of lagging performance and sizable raises
at financial companies, analysts said. Banks often pay their chiefs more based on the size of the
company than on performance, said Mike Mayo, a banking analyst for Wells Fargo in New York.
Bank boards also are more likely to change how they pay executives from year to year, varying
such measures as total shareholder return or return on equity, he added. “We’ve seen moving
targets in terms of metrics used to derive executive compensation.”
SEC reporting rules also contribute, said Ira Kay, an executive-pay consultant with Pay
Governance in New York. Early in the year, most major financial-services companies set equity
awards that boards base primarily on the prior year’s performance, Mr. Kay said. But SEC rules
require those awards to be counted with salary, bonuses and other compensation for 2018.
The lowest-paid Wall Street chief last year was Warren Buffett, 88-year-old chairman and CEO
MORE
List of Highest-Paid Banking and Financial CEOs
U.S. Banks Rush In as European Banks Stumble
Big Companies Pay CEOs for Good Performance—and Bad
Media CEOs Reigned in 2018 Pay
Strong Returns Lift Pay for Software CEOs
The WSJ CEO Pay Ranking
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2020/2/25 下午9:50Wall Street Chiefs’ Pay Doesn’t Sync With Returns – WSJ
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of Berkshire Hathaway Inc. Mr. Buffett was paid just under $389,000 last year as Berkshire
Hathaway, the industry group’s largest company, delivered a return of 3%.
As of July 1, Mr. Buffett held 35.9% of Berkshire Hathaway’s Class A shares, which carried a
market value of nearly $84 billion, according to FactSet. In recent years, Mr. Buffett has begun a
process of unwinding portions of his ownership in the company to donate to a handful of
charitable foundations. Debbie Bosanek, Mr. Buffett’s assistant, said he has pledged to
eventually give away all of his shares, nearly the entirety of his net worth.
The Journal’s analysis excluded companies with CEOs who joined or left midyear, leading to the
omission of a few notables. Lloyd Blankfein of Goldman Sachs Group Inc., who stepped down in
October last year, made $23.4 million on his way out, while Goldman’s total shareholder return
was negative 33.5%. David Solomon, who replaced Mr. Blankfein, received $20.7 million in total
pay, a 26.2% raise over the prior year when he served as Goldman’s chief operating officer.
Goldman didn’t respond to a request for comment.
Kenneth Chenault, who left American Express Co. in February last year after a long stint as one
of the nation’s most prominent African-American CEOs, was paid $24.2 million, while
American Express closed the year with a negative 2.6% shareholder return. An American
Express spokeswoman noted that the company’s proxy ties $12.3 million of Mr. Chenault’s pay
to prior years.
The Journal analyzed CEO compensation and company performance data reported by S&P 500
companies through May 1, using pay data provided by MyLogIQ LLC and performance measures
from ISS Analytics, a unit of proxy adviser Institutional Shareholder Services. The analysis
omitted companies if their most recent proxy filing covered fiscal years ended before July 1,
2018, because they largely reflect an earlier time period. See the full list here:
Appeared in the July 9, 2019, print edition as ‘Bank CEO Pay Doesn’t Sync With Returns.’
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