Hierarchy of the over and underpaid

Financial services is meant to be an industry in which employees get to eat some of what they kill. If someone generates profit, they should be a partial beneficiary.

This is the theory.

The reality is that the amount of profit going to employees varies dramatically by organisation. Some banks pay a lot more per head in compensation than they earn per head in profit; some pay less.

An analysis of 2010 compensation per head as a proportion of profit per head across seven investment banks (JPMorgan, Goldman Sachs, Deutsche, UBS, Credit Suisse, RBS, and BarCap) show that, on average, pay per head last year was 1.6 times profits.

UBS and Credit Suisse awarded substantially more per head in compensation than they earned per head in profit. Only Deutsche and RBS paid less.

Compensation per head as a proportion of profits per head, 2010

UBS*: 3.1

Credit Suisse*: 2.3

Goldman Sachs: 1.8

JPMorgan*: 1.4

BarCap: 1.2

Deutsche Bank*: 0.9

RBS*: 0.8

* Investment bank only

The immense productivity of FICC

Separately, analysis out this week from Coalition, an intelligence company, underscores how much more productive employees in fixed income, currencies and commodities are than their counterparts in equities and M&A.

In 2010, Coalition calculated that productivity per head in fixed income was $3.7m, versus $1.8m in origination and equities.

It's easy to see why FICC professionals have historically been paid more - and why they have most to lose from the shift to risk adjusted compensation formulae.