Shareholders spurring wage gap on Wall Street

Revenue at Goldman Sachs was relatively flat in 2013, yet full-year net earnings rose roughly 8%. How’d they do it? The bank slashed pay for most of its foot soldiers. The General, though, he did just fine.

Goldman Chief Executive Lloyd Blankfein will likely earn a pay package of roughly $23 million for 2013, up 10% from the previous year despite a lack of revenue growth and a dip in return on equity – two of the three key ways to assess a bank’s performance. It seems the compensation committee put more onus on the final piece of the puzzle: stock price. Goldman shares soared 39% in 2013.

In the post-crisis world, shareholders are the only priority – and that’s become abundantly clear over the last few weeks. JPMorgan Chase set aside just 1% more for salaries and bonuses for 2013 than it did the year before, but the boss did just fine. Chief Executive Jamie Dimon saw a 74% pay increase to $20 million, despite the firm suffering billions in outflows due to a host of legal problems. Why? JPMorgan shares were up 33% last year.

Same song, different tune at Morgan Stanley, which took care of its wealth managers but reigned in pay for bankers. Chairman and CEO James Gorman, meanwhile, saw his stock bonus nearly double for 2013. Morgan Stanley shares were up 64% in 2013.

Every board has a duty to protect its shareholders. The easiest way to do that is to align executive compensation with stock performance. The difficult part this time around is that banks are becoming healthier because they employ fewer people and pay them less. Just not their CEOs.