Goldman Cutting Pay Still Tops JPMorgan as Wall Street Bonus Season Begins
JPMorgan started telling employees of year-end payouts this week, while Morgan Stanley will do it today, people told of the banks’ plans said, requesting anonymity because the timing isn’t public. Citigroup Inc., which awarded executive bonuses on Jan. 18, started telling traders and investment bankers about payouts the next day, said Jon Diat, a spokesman. Yesterday, it said it gave about $50 million in stock to 15 top executives. London- based Barclays Plc’s bankers will get the news mid-February, two people said.
U.S. and European banks are under pressure to curb bonuses after taxpayers were forced to bail out the industry during the financial crisis. JPMorgan’s investment bank set aside enough money to pay an average of $369,651 to each employee for 2010, or 2.4 percent less than in 2009, according to the company’s year-end financial statements. Goldman Sachs’s pool equates to an average of $430,700, a reduction of 14 percent.
“As a rule of thumb, bonuses are going to be down 5 percent to 10 percent on last year as revenues have fallen,” said Shaun Springer, chief executive officer of London-based Square Mile Services Ltd., which advises firms on compensation.
Investment banks set aside a portion of revenue to reward employees and typically decide bonuses at the end of the year based on annual results. Average pay per worker doesn’t reflect the amount of money each employee actually receives. Top executives sometimes receive multimillion-dollar awards, while clerical workers get less.
The four New York-based banks will spend a combined $84.4 billion, or an average of $141,192 apiece, on their 598,073 workers, according to financial reports released since Jan. 14.
That figure is pulled down by the average at Citigroup -- $93,962 last year -- because the bank has 260,000 employees, many of them tellers, commercial bankers and transaction processors, who earn lower pay. Citigroup doesn’t break out pay for its investment-banking and trading division, where workers get multiples of what most retail banking employees receive.
Newly promoted Chief Operating Officer John Havens received stock worth $4.75 million as of the share’s closing price on Jan. 18, when the bonuses were awarded, according to yesterday’s disclosures. Brian Leach, the chief risk officer, got stock worth $5.16 million.
Citigroup Chief Financial Officer John Gerspach got $2.33 million and Vice Chairman Lewis Kaden received $4.29 million. Americas consumer banking chief Manuel Medina-Mora got $4 million. Mike Corbat, head of Citi Holdings, got $4.88 million, as did the bank’s chief administrative officer, Don Callahan. The bank disclosed last year that Chief Executive Officer Vikram Pandit declined a 2010 bonus. Shannon Bell, a Citigroup spokeswoman, declined to elaborate on payouts.
Morgan Stanley cut the investment bank’s compensation pool by 2 percent to $7.08 billion. The firm doesn’t disclose the number of employees in the unit. Companywide, Morgan Stanley paid its 62,542 employees an average $256,596 last year, up from $238,602 for each of the 60,494 employees at the end of 2009, figures released yesterday show. The company’s 2010 pay accounts for a full-year ownership of the Smith Barney brokerage, compared with seven months in 2009.
The firm has told some employees to expect investment- banking bonuses to decline 10 percent to 30 percent, two people briefed on the matter said last month.
JPMorgan, which reported earnings Jan. 14, set aside $9.73 billion for 26,314 workers at its investment bank.
The U.K. Financial Services Authority last month approved new rules agreed by European Union regulators restricting guaranteed bonuses and up-front cash payments for banks’ proprietary traders and broker dealers. The regulations allow bankers to receive about 25 percent of their bonuses in immediate cash payouts and require the rest to be deferred or held in shares for a minimum of three years.