Wall Street's Top CEOs Take Home $126 Million for 2017
February 16 2018 - 2:20PM
Dow Jones News
By Liz Hoffman, Christina Rexrode and Aaron Lucchetti
Wall Street CEOs are getting paid the big bucks again.
Goldman Sachs Group Inc. and Citigroup Inc. said Friday that
they gave their CEOs raises for 2017, meaning all five large U.S.
banks with significant trading and investment-banking operations
have done so.
The chief executives of the banks, which include JPMorgan Chase
& Co., Bank of America Corp., and Morgan Stanley, were paid on
average $25.3 million for their work last year, up 17% from 2016,
according to filings with the U.S. Securities and Exchange
Commission. For the group as a whole, combined total compensation
of about $126 million is the highest annual tally since before the
financial crisis.
The gains mark the fifth consecutive year in which pay rose for
Wall Street's top CEOs. In 2017, the increases reflected stronger
profits for banks driven by a growing economy, rising employment,
loosening regulations under President Donald Trump and an improving
interest-rate backdrop for lending.
Citigroup was the latest to report that it was increasing the
boss's compensation. CEO Michael Corbat was paid $23 million for
his work in 2017, up 48% from his $15.5 million payday in 2016.
Goldman Chairman and CEO Lloyd Blankfein was awarded a $24 million
pay package, up 9% from the prior year.
Most of the annual compensation announced over the past month at
the nation's largest banks comes in the form of incentive bonuses,
often stock-based and not cashed until later. And all the pay
packages still pale in comparison to Mr. Blankfein's $68.5 million
award for 2007 when trading profits and risk-taking drove results
for Goldman and its peers.
Still, this bonus season for Wall Street CEOs is in many ways
the best in more than a decade. All five CEOs were awarded at least
$20 million, something that hasn't happened since 2006, according
to a Wall Street Journal review of banks' proxy statements. Mr.
Corbat, Bank of America CEO Brian Moynihan and Morgan Stanley chief
James Gorman each enjoyed their best annual pay packages as chief
executive.
Mr. Blankfein received a cash salary of $2 million -- steady
from 2016, when he got a pay cut -- plus a cash bonus of $4.4
million and the remainder in stock units whose value will depend on
how Goldman does over the next few years, according to a regulatory
filing Friday.
That puts him in the middle of the pack among Wall Street
chiefs. JPMorgan Chase & Co.'s James Dimon got a 5% raise to
$29.5 million. Mr. Gorman followed at $27 million after a 20% pay
raise, while Wells Fargo & Co., which doesn't have a large Wall
Street presence, hasn't yet disclosed its CEO's compensation.
Goldman's revenue in 2017 rose 5%. Setting aside the impact of a
hit from the recently passed tax-overhaul law, its return on equity
was 10.8%, one of only two banks to crack double digits.
Yet its core business of fixed-income trading had its worst year
since the financial crisis. The firm bet wrong on things including
interest rates, the U.S. dollar, and natural gas. Mr. Blankfein
once ran that business and remains closely associated with its
performance.
The biggest jump in pay came for Mr. Corbat, the lone Wall
Street CEO of the five who isn't also the bank's chairman.
Citigroup posted a loss of $6.2 billion for 2017, though that
was because of a one-time charge the bank had to take to prepare
for the new tax law. The board said it had considered Citigroup's
underlying results, as well as the bank's increased shareholder
dividends and its passing grade on the Federal Reserve's stress
test.
It has been a long road for Mr. Corbat to crack the $20 million
pay mark. For his first full year as CEO, 2013, he was awarded
$14.5 million. The following three years, his pay wavered between
$13 million and $16.5 million, as Citigroup struggled to increase
profitability and break out of past regulatory problems.
For his work in 2017, Mr. Corbat is getting a cash bonus of
$6.45 million, to go along with his $1.5 million salary. The rest
of the package comprises stock that is dependent on the bank's
performance.
Last year, Citigroup's board cut his pay because of "the firm's
performance relative to its financial targets." This year, the
board said Mr. Corbat had demonstrated "exceptional leadership in
multiple critical areas," including risk management and talent
management. It also said it considered the pay of CEOs at peer
institutions.
Write to Liz Hoffman at liz.hoffman@wsj.com, Christina Rexrode
at christina.rexrode@wsj.com and Aaron Lucchetti at
aaron.lucchetti@wsj.com
(END) Dow Jones Newswires
February 16, 2018 14:05 ET (19:05 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
JP Morgan Chase (NYSE:JPM)
Historical Stock Chart
From Aug 2024 to Sep 2024
JP Morgan Chase (NYSE:JPM)
Historical Stock Chart
From Sep 2023 to Sep 2024