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JPMorgan Shrinks Investment Bank Compensation Pool 4.4%

JPMorgan Chase & Co. Offices in New York
A businessman speaks on his mobile phone in front of JPMorgan Chase & Co. offices in New York. Photographer: Scott Eells/Bloomberg

Oct. 11 (Bloomberg) -- JPMorgan Chase & Co.’s corporate and investment bank allocated 4.4 percent less for employee compensation in the first nine months of the year as the division’s revenue climbed 5.7 percent.

The unit’s $8.69 billion in compensation fell to 31 percent of revenue, excluding accounting adjustments, from 34 percent in the same period of 2012, according to figures posted today on the New York-based firm’s website. The amount equals $165,774 for each of the division’s 52,445 employees. The unit employed 52,226 people a year earlier.

JPMorgan, the biggest U.S. lender by assets, combined its investment bank with the corporate bank and treasury and securities-services units last year under co-heads Mike Cavanagh, 47, and Daniel Pinto, 50. The group has more than twice as many employees as the investment bank.

The amount set aside for compensation includes salaries, bonuses, benefits and the cost of deferred pay from previous years. Figures for average pay don’t represent what individuals actually receive and are calculated by dividing the total compensation expense by the number of employees.

“We really believe in pay for performance,” Cavanagh told shareholders in February. JPMorgan’s scale can help keep the compensation-to-revenue ratio low while offering top employees pay at least as good as competitors, he said.

Companywide compensation, JPMorgan’s largest expense, was $23.8 billion in the nine-month period, up 1 percent from a year earlier.

The bank told investors in February that it planned to cut adjusted expenses by about $1 billion. Chief Financial Officer Marianne Lake said last month the lender probably won’t meet that goal because of higher litigation expenses and costs to improve its controls and compliance.

To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net

To contact the editors responsible for this story: David Scheer at dscheer@bloomberg.net; Christine Harper at charper@bloomberg.net

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