A collation of all that's currently known on 2009 compensation, bank by bank
Following our previous article on the alleged state of salaries in each bank, here's an update on all that's currently in the public domain regarding compensation on a bank by bank basis. We're amending this as new details become available.
The list is long (and not in alphabetical order), so for quick consumption, the notable points are:
· In dollar terms, last year's highest payer per head was Goldman ($498k), followed by Deutsche ($478k) and Credit Suisse ($419k). BofA Merrill is rumoured have paid $400k. UBS was the straggler, with average comp of $315k.
· Only JP Morgan paid more per head in 2009 than in 2007.
· UBS was least able to afford its investment bankers: its 2009 investment banking compensation ratio was 81%.
· Deutsche Bank was most able to afford its investment bankers: its 2009 corporate and investment banking compensation ratio was 26%.
Goldman Sachs
Compensation per head, 2009: $498k (2008: $316k; 2007: $661k)
Compensation ratio, 2009: 36% (2008: 49%; 2007: 43%)
Salary increases?: Yes, allegedly significant.
Approach to UK bonus tax? Unclear. Brunt thought to be being borne by UK partners who have had pay capped at 1m.
Deferrals? All Goldman partners to receive 60% of bonuses in stock vesting over three years, but which can't be sold for five years. Members of the management committee will receive their entire bonuses in stock. Further down the food chain, headhunters say the standard is for 60-70% to be deferred over three years.
Clawbacks? Yes, for taking excessive risk.
Other things of note: The New York Post reported that Goldman's UK partners who've had their pay capped have been told they'll be 'made whole' through additional stock grants in 2010 or early 2011.
Morgan Stanley:
Compensation per head, 2009: Morgan Stanley doesn't break out compensation in its investment bank
Compensation ratio, 2009: 57% in the institutional securities business. But only 40% when the cost of buying back its own bonds (a pure accounting issue) is added back into the revenue line.
Salary increases?: Yes.
Approach to UK bonus tax? Unclear.
Deferrals? 65% for senior executives, rumours of 70% deferrals for biggest earners in London.
Clawbacks? Yes. Morgan Stanley has a clawback which is active for three years after compensation has been paid, and which is triggered by 'conduct detrimental to the company or one of its businesses.' This was recently widened to include clawbacks for bad risk analysis.
Other things of note: James Gorman has promised to cut Morgan Stanley's compensation ratio in future.
JP Morgan (investment bank)
Compensation per head, 2009: $379k (2008: $276k; 2007: $311k)
Compensation ratio, 2009: 33% (2008: 62%; 2007: 44%)
Salary increases?: Yes, although allegedly only for senior associates and above.
Approach to UK bonus tax? Employees are bearing some of the tax. On the Q4 conference call Dimon said the reduction in compensation expenditure this year was partly down to the tax.
Deferrals? 40-50% now deferred over three years, with weighting towards the first year. 60% deferral rumoured for MDs.
Clawbacks? Yes, recently broadened to include bad risk analysis.
Other things of note: JP Morgan is one of the only banks to be paying its investment bankers more in 2009 on a per head basis than it did in 2007.
Deutsche Bank (corporate and investment bank only)
Compensation per head, 2009: €347k ($478k). (2008: €236k; 2007: €417k)
Compensation ratio, 2009: 26.1% (2008: 109%; 2007: 35%)
Salary increases?: Salaries are being increased by between 5 and 30%. Bonuses are being reduced by, 'an equal amount.'
Approach to UK bonus tax? Deutsche is taking a €225m (196m) charge to cover the bonus levy. The cost is being spread across its employees globally.
Deferrals? Deutsche has said that a "significant portion" of pay is being deferred under a new compensation plan. 75% of deferred pay is in stock; 25% is in cash. Cash is deferred over three years; stock is deferred over 3.75 years. However, there are conflicting rumours as to how this works in practice. Bloomberg reports that all bonuses below €100k are being paid entirely in cash. Above €100k, it says deferrals are being implemented on a sliding scale, starting at 25%. According to one London headhunter, the deferred portion of bonuses will be paid in equal quarterly installments for around two years, starting in 2011.
Clawbacks? Yes, senior exec comp can be clawed back in full.
Other things of note: At 26%, Deutsche's compensation ratio is the lowest out of all the banks that break out pay for investment banking businesses.
BofA Merrill
Compensation per head, 2009: Information not broken out for the investment bank. However, someone 'close to the bank' told Bloomberg that average comp per head in the investment bank will be $400k this year. The Financial Times said that 'on average' bonuses in the investment bank will be $300-500k.
Compensation ratio, 2009: Information not broken out for the investment bank.
Salary increases?: Yes.
Approach to UK bonus tax? Not clear.
Deferrals? Yes, on a sliding scale. According to the Financial Times members of the management team will get all stock bonuses deferred over several years. Recipients of $5m bonuses will only get 5% in cash, paid in mid January. For $5m bonuses, 28% will take the form of stock, paid in August 2010 and August 2011; 67% will be long term stock awards vesting over several years.
Bloomberg claims that people getting the smallest bonuses at BofA Merrill will receive half in cash, payable later this month.
Rumour also has it that the bank is paying 100% cash bonuses below $100k.
Clawbacks? Yes, recently broadened to include low profits.
Citigroup
Compensation per head, 2009: Information not broken out for the investment bank.
Compensation ratio, 2009: Information not broken out for the investment bank.
Salary increases?: Yes.
Approach to UK bonus tax? Not clear.
Deferrals? Instantly accessible cash bonuses are capped at $100k at Citigroup. However, the bank is also awarding deferred cash and restricted stock units, which according to Financial News, can be sold as early as August. According to the paper, 'between 60% and 75% [of Citigroup bonuses]' globally will, 'be paid either in cash or stock that could be sold within three months.'
However, this doesn't apply in London, where banks are obliged to defer at least ??% of bonuses by the FSA. One City headhunter said Citi's UK deferrals operate on a sliding scale according to the size of the payout. In London, he says anything from 40-70% of bonuses are restricted over a three year period. Initial cash payouts are restricted to $100k, but the balance of this year's payment will be available in two months' time.
Clawbacks? Yes.
Credit Suisse (investment bank)
Compensation per head, 2009: CHF446k ($419k) (2008: CHF357k; 2007: CHF494k)
Compensation ratio, 2009: 42.1% (2008: NA; 2007: 54%)
Salary increases?: Yes.
Approach to UK bonus tax? Credit Suisse has said that it' trimming its global bonus pool by 5% to cover the cost of the tax. 400 senior employees in the UK will suffer further 30% reduction this year.
Deferrals? Bonuses below CHF125k ($100k) will be paid entirely in unrestricted cash. Above this, a variable proportion (determined by a secret table) will be deferred. Of the deferred element, 50% will be paid in Scaled Incentive Share Units (SISU) linked to the bank's share price and RoE; the other 50% will be paid in Adjustable Performance Plan Awards (APPA), based on the bank's RoE. SISUs are deferred over four years. APPAs are deferred over three years.
Clawbacks? Yes. APPAs are adjusted downwards if an employee's business area is loss making.
Other things of note: Across the bank as a whole, Credit Suisse has said that it will be deferring 40% of this year's CHF6.9bn bonus pool. 60% of senior management bonuses are being deferred. The bank also says the average bonus will be CHF144k ($136k) for 2009,, of which CHF86k will be in cash.
UBS (investment bank)
Compensation per head, 2009: CHF335k ( (2008: CHF271k; 2007: CHF475k)
Compensation ratio, 2009: 81.2% (2008: NA; 2007: NA)
Salary increases?: Yes.
Approach to UK bonus tax? Not clear.
Deferrals? UBS initially said simply that a higher proportion of pay is now deferred than in the past and that in total, CHF3.2bn of deferred compensation is being carried over from previous years. It subsequently emerged that UBS is deferring 60% of all pay above $250k.
Clawbacks? Yes. UBS is clawing back CHF300m of pay awarded last year after the bank failed to make a net profit for 2009.
Barclays Capital
Compensation per head, 2009: Barclays is paying a total of 4.5bn in compensation for 2009, amounting to 195k ($305k) per head.
Compensation ratio, 2009: 38% (2008: 44%, 2007: 47%)
Salary increases?: Yes, in December Barclays announced it was increasing salaries across the bank and backdating the increases to July. Reports suggest that these increases haven't taken place yet, however.
Approach to UK bonus tax? Barclays is spreading the pain globally.
Deferrals? Top executives and senior management will get up to 100% of their bonuses deferred this year. Below that, the next 2,000 staff will have up to 75% of their bonuses deferred for three years. Among remaining staff, a 'high proportion' will reportedly receive up to 50% of their bonuses in cash, with the remainder deferred over three years.
Clawbacks? Not clear.
RBS
Compensation per head, 2009: 174k ($265k) total comp, of which 77k bonus.(2008: 117k; 2007: 160k)
Compensation ratio, 2009: 27%. (2008: 76%; 2007: 42%)
Salary increases?: No.
Approach to UK bonus tax? Just 208m spent on UK bonus tax in Q409.
Deferrals? Non senior staff will receive 50% in paper that's immediately convertible into cash in June 2010. Senior staff will receive 33% in paper, convertible into cash in June 2010. Remaining payments will be made equally over the following two years. Executives will receive nothing until June 2012.
Clawbacks? Yes.
BNP Paribas, Corporate and Investment Bank
Compensation per head, 2009: €197k ($277k) (this includes all deferred comp until 2013 - a figure not included in other banks' pay per head figures). No figures available for previous years. BNP also has a bonus pool of €1bn (€500m cash, €500m deferred), for 4,000 traders, implying a total bonus per head of €250k for its trading staff.
Compensation ratio, 2009: 27.7% (including all deferred compensation until 2013, meaning 2009 figure is likely to be considerably lower). No figures available for previous years as BNP hasn't broken out compensation expense historically.
Salary increases?: Not yet.
Approach to UK bonus tax? BNP incurred a total cost of €250m paying the French and the UK bonus taxes. This is in addition to the money set aside for compensation - so it looks like the bank's paying the tax.
Deferrals? At least 50% of 'variable pay' is being deferred over three years.
Clawbacks? Yes.
Société Générale, Corporate and Investment Bank
Compensation per head, 2009: SG doesn't break out compensation costs, so pay per head figures are difficult to come by. However, it has said that it has a €550m bonus pot (€300m of which is deferred) for an unspecified number of traders. Rough calculations (based on SG having 70% the number of CIB staff of BNP Paribas and therefore 70% the number of traders) suggest pay for these traders is in the region of €196k each.
Compensation ratio, 2009:
Salary increases?: Not yet.
Approach to UK bonus tax? Traders themselves appear to be bearing the cost of the French and UK bonus tax. According to SocGen Chairman Frederic Oudea, 'any taxes' will be taken from the €250m set aside for cash bonuses this year.
Deferrals? According to a presentation by SocGen, 55% of bonuses will be deferred over three years, with the deferred element paid in stock or 'other indexed items.'
Clawbacks? Yes.
