Anshu Jain, who takes over as co-chief executive officer of Deutsche Bank AG at the end of May, took the biggest pay cut on the firm’s management board after a drop in revenue at his corporate- and investment-banking unit.
Jain earned 5.81 million euros ($7.67 million) in salary and bonuses for last year, down from 7.55 million euros, Deutsche Bank said today in its financial report. Jain and the board’s other six members received 26.4 million euros compared with 32.4 million euros in 2010, when there were eight members.
The investment bank, led by Jain, recorded a slide in revenue in the second half amid Europe’s sovereign debt crisis. Deutsche Bank announced 500 job cuts at the unit in October to reduce costs as tougher regulation weighs on profitability. Morgan Stanley, Credit Suisse Group AG and Citigroup Inc. all reduced senior investment bankers’ pay for last year.
“Given what they were planning, the investment bank’s performance last year was disappointing,” said Ingo Frommen, an analyst with Landesbank Baden-Wuerttemberg in Stuttgart who recommends investors hold the stock. “But blaming Jain for what happened on international markets isn’t fair either.”
Deutsche Bank fell 25 percent last year in Frankfurt trading as the sovereign-debt crisis and losses on Greek bonds spooked investors. That compared with a 32 percent drop in the Bloomberg Europe Banks and Financial Services Index.
Chief Executive Officer Josef Ackermann’s pay was almost unchanged at 6.3 million euros, according to the annual report. Jain earned more than Ackermann in 2010 after the corporate- and investment-banking unit reported record revenue.
The management board shrank by one member when Michael Cohrs, the former co-head of the investment bank, retired on Sept. 30, 2010. Excluding his compensation in 2010, the seven current board members saw their pay decline 8.9 percent.
Juergen Fitschen, who heads Germany and will become co-CEO with Jain, was tied for the lowest pay among all management board members. He earned 2.85 million euros last year, down from 2.99 million euros. Consumer-banking head Rainer Neske earned the same.
Financial firms worldwide are facing public and political pressure to limit bankers’ compensation after taxpayers were forced to bail out the industry during the financial crisis. Deutsche Bank didn’t require direct state aid to navigate the fallout from the 2008 collapse of Lehman Brothers Holdings Inc.
Profit Goal Missed
The German bank missed a goal of doubling pretax operating profit to 10 billion euros last year from 2009 levels as the debt crisis curbed trading. Net income slid 76 percent to 147 million euros in the fourth quarter as the investment bank posted a 422 million-euro pretax loss.
Jain’s pay declined more than that of his bankers. Deutsche Bank cut pay for employees at the corporate and investment bank by 15 percent in 2011, setting aside 5.05 billion euros for compensation and benefits, compared with 5.91 billion euros in 2010, according to company filings last month. That was enough to pay an average of 332,785 euros to the 15,184 employees at the division, which includes transaction banking, down from 378,659 euros a year earlier, the documents show.
Deutsche Bank paid 1,363 “regulated employees,” or those whose work is deemed to have a major influence on the bank’s overall risk profile, 1.94 billion euros last year, including 1.5 billion euros in variable pay, according to its remuneration report published today. Deutsche Bank increased the number of such employees to 1,363 in 2011 from 168 in 2010 after discussions with financial regulators.
Barclays Plc cut CEO Robert Diamond’s remuneration by almost a third last year and froze his salary for 2012 after the lender missed its profitability target. Diamond received 6.3 million pounds ($10 million) in salary, bonuses and stock last year, making him Britain’s second-best paid bank CEO after HSBC Holdings Plc’s Stuart Gulliver, with 7.16 million pounds.
Deutsche Bank shrank its bonus pool by 17 percent, Ackermann told reporters Feb. 2. Bankers will receive 37 percent less cash than last year as part of their bonus, while about 61 percent of the total amount will be deferred, he said.
The bank told employees it will impose a 200,000 euro cap on bonuses paying out this year, three people with knowledge of the discussions said last month.
Staff will receive as much as 100,000 euros in cash and 100,000 euros in stock they won’t be able to sell before August, the people said, declining to be identified because the talks were private. Any further bonus will be deferred over three years, they said. The limit will apply to employees across the company, including the investment bank, one of the people said.
Volkswagen AG’s Martin Winterkorn, who led the world’s second-largest carmaker to a record profit last year, earned 17.5 million euros to top the rankings as the best-paid CEO among companies on Germany’s benchmark DAX Index.