Monday’s Headlines: Are Big Bank CEOs' 2011 Comps Too High or Too Low? A Tale From Two Papers
It all comes down to your point of view. In an article entitled “Bad Year for Wall St. Not Reflected in Chiefs’ Pay,” The New York Times’s DealBook blog highlights that bank CEOs' pay does not reflect the troubled institutions they oversee. Meanwhile, Wall Street Journal’s take on the same subject is that “Wall Street's pay crunch is squeezing some wallets harder than others” – with “some” referring to Citi and Morgan Stanley’s CEOs.
Citigroup CEO Vikram Pandit received deferred stock in the bank valued at $3.7 million based on the company’s current price on top of his annual base salary of $1.75 million, and brings his disclosed pay so far for 2011 to $5.45 million. Pandit last year was awarded a $16.7 million retention bonus, plus stock options that could add $6.5 million to the package’s overall value. Meanwhile the bank’s stock fell 44 percent in 2011, and many employees were told to expect small bonuses or none at all.
At Morgan Stanley, shares dropped 44 percent in 2011, while its CEO James Gorman is taking a 25 percent pay cut from 2010 and receiving $9.7 million in deferred compensation for his work last year. In 2010, Gorman received $7.4 million in stock and his total compensation for the year was $14 million. JPMorgan Chase’s shares in 2011 fell 22 percent, yet CEO Jamie Dimon this year is expected to receive a similar comps package as last year: $17 million as part of an expected $23 million total.
The Journal’s take on Dimon’s pay? “That is the same as his 2010 award, despite a record profit last year,” the paper wrote in an article entitled “Bonuses Pinched for Bank CEOs.”
The Times quoted one comp expert who was surprised executive pay was not reigned in further this year, adding: “A lot of people in the middle took big hits this year,” he said. “It could create some big ‘us versus them issues’ as to why the rank and file are taking a bigger hit than the senior executives.”
Scrutiny of executive pay in Britain heightens. [NY Times]
Fifth Third Bancorp and SunTrust Banks both reported lower Q4 earnings but saw credit costs decline. [WSJ]
Small banks thrive below regulators’ radar. [Investment News]
While Morgan Stanley improved its 2011 profit by deferring some pay, those costs will be recorded in the next few years. [Bloomberg]
GE Capital has transitioned into a profit center. [DealBook]
More than two-thirds of hedge funds have not reached their high water marks, the point at which they can charge investors performance fees. [Financial Times]
The number of deals in which private equity firms trade companies among each other rose by 43 percent to 165 in Europe last year. [Financial Times]
Carlyle co-founder David Rubenstein says buyout firms could actually increase employment at the companies they acquire. [CNN]