How We Crunched the Numbers to Find the Best-Paid CEOs

For the Finance 50 compensation tables, we limited our universe to the largest publicly listed financial companies for which we had 2011 proxy statements as of May 1. We created a list of the largest companies by market capitalization using the Equity Screening function. These companies had to be headquartered in the U.S.

The CEOs of the 50 largest companies that met our criteria are ranked by total compensation. Because KKR has two CEOs, only 49 companies are listed. All of the data come from the Summary Compensation Table in companies’ proxy statements for their 2011 fiscal year. Direct compensation is the sum of base salary, annual bonus, non-equity incentive-plan compensation and “all other compensation.” Indirect compensation is the value of stock and options awards.

For a number of firms, such as Bank of America, JPMorgan Chase and Goldman Sachs, a portion of the pay in any given year may be in recognition of a CEO’s performance in the previous year. To make up for the lag between performance and pay, in calculating the best- and least-value CEOs, we used three years of stock returns.

Using the Total Return Analysis function, we calculated the cumulative total return for each stock for fiscal years 2009, 2010 and 2011. We divided that figure by the CEO’s total incentive compensation in 2011 (stock and option awards and non-equity incentive-plan compensation) to derive the percentage point return on stock for every $1 million of incentive pay. (For returns that were less than zero, we inverted the denominator.)

Two Ways of Counting

We also added a table showing the amounts 10 big bank boards awarded CEOs for their work in 2011, which in some cases include money and stock granted in early 2012. These figures were found in proxies and other filings.

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