Discover your dream Career
For Recruiters

TARP Banks Weigh Hiking Base Pay

Adapting to congressional concerns about distorted incentives, investment banks are considering raising base salaries of top-paid employees whose bonuses were limited under the economic stimulus package enacted last month.

That legislation bans any cash bonuses for the top five executives and 20 more of the highest-paid employees at each bank receiving taxpayer aid. And it caps stock bonuses at one-third of each individual's total compensation. But the measure does not limit salaries.

"The trend is to increase the base pay in light of the reduced bonuses," Scott Talbott, senior vice president of government affairs at the Financial Services Roundtable, told The Wall Street Journal.

The story names Citigroup and Morgan Stanley as among institutions contemplating such a step. Wells Fargo said last week it raised the base salary of Chief Executive John Stumpf and two others.

The Journal says internal deliberations about restructuring compensation are at an early stage, while banks await the Obama administration's rules for enforcing the new law.

Managing directors, the top of Wall Street's food chain, get base pay of $200,000 to $1.5 million (for chief executives) at the largest firms, with bonuses that usually amount to a large multiple of the base. By emphasizing the variable component, the current system both lets firms tie pay to measured performance and quickly adjust compensation expense to volatile revenues.

The Treasury Department is to issue its bonus regulations for Troubled Asset Relief Program aid recipients by the end of this month. Banks are hoping that the administration, which opposed specific restrictions of the type that wound up in the law, will confine the caps to top executives and other senior officials who exert authority but don't directly generate revenue.

author-card-avatar
AUTHOReFinancialCareers News Insider Comment

Sign up to Morning Coffee!

Coffee mug

The essential daily roundup of news and analysis read by everyone from senior bankers and traders to new recruits.

Boost your career

Find thousands of job opportunities by signing up to eFinancialCareers today.
Latest Jobs
Linux Engineer
Chicago, United States
DevOps Engineer
Chicago, United States
Selby Jennings
Quantitative Researcher - Systematic Macro
Selby Jennings
New York, United States
Selby Jennings
Quantitative Researcher - NLP
Selby Jennings
New York, United States
Selby Jennings
Systematic Macro Quant Researcher
Selby Jennings
New York, United States
Selby Jennings
Quantitative Analyst - Commodities
Selby Jennings
New York, United States

Sign up to Morning Coffee!

Coffee mug

The essential daily roundup of news and analysis read by everyone from senior bankers and traders to new recruits.