The list of the biggest earners in finance usually reads like a Who’s Who of Wall Street. But these days, it reads more like a Who’s That?
It turns out that some of the highest paid financial executives in America work far from the canyons of Lower Manhattan, at companies that have largely avoided the outcry over the return of hefty paydays on Wall Street.
Topping the list is John G. Stumpf, head of Wells Fargo, the bank based in San Francisco, according to an analysis of 2009 compensation in the industry. Stumpf was paid a personal best of $18.7 million (Rs87 crore today) in cash and stock for 2009—up 64% from 2007, just before the financial crisis struck.
Photo by Bloomberg; Graphic by Paras Jain/Mint
Stumpf is making twice as much as Lloyd C. Blankfein, his counterpart at Goldman Sachs. Blankfein—who for many Americans has come to symbolize this new period of Wall Street riches—was paid $9.7 million for 2009, less than some expected.
It is a stunning reversal in the old pecking order of pay. Big names on Wall Street such as Blankfein usually take home far more than staid bankers such as Stumpf, whose bank’s biggest business is making home mortgages and loans to corporations.
But since the bailout, the rules of banker pay are bending. Some of the industry’s biggest names are being paid less than relative unknowns. Chief executives, who are usually at the top of the pay heap, are taking home roughly the same amounts as executives who work for them—and sometimes less.
Stumpf and other executives have moved up the pay ladder partly because the likes of Blankfein have moved down. And for all the focus on what top executives earn, what is most startling is how many six-, seven- and eight-figure sums are being awarded to Wall Street bankers and traders whose pay often is unnoticed—if it is disclosed at all.
How much senior executives earn, in cash and stock, is made public in corporate filings. This year, the results are surprising, according to an analysis by Equilar, an executive compensation research firm.
Leaders in the pay sweepstakes include the heads of the credit card giants Visa Inc., MasterCard Worldwide, Capital One Financial Corp. and American Express Co.Joseph W. Saunders, who runs Visa, was paid about $15.5 million, a figure that vastly eclipses the compensation for top executives at Bank of America NA and Citigroup Inc.
Ajay Banga, president of MasterCard Worldwide; Laurence D. Fink, chairman and chief executive of the giant money management company BlackRock Inc.; and Richard B. Handler, the boss at the Jefferies Group, a midsize investment bank that is virtually unknown outside financial circles, were each paid about $13 million. Executives at certain discount brokerages, insurance companies and regional banks were close behind.
The big money, as ever, is in Wall Street trading. But pay for employees with few executive responsibilities is typically exempted from disclosure requirements. Brokers and asset managers also land windfalls that are often undisclosed.
“There are probably thousands of people that are in the Millionaire Club—or even the 10 Millionaire Club—that have gotten no heat,” said Alan Johnson, a long-time Wall Street compensation consultant.
To be sure, a handful of prominent companies dominate the well-paid list. Senior managers from JPMorgan Chase and Co. and Goldman Sachs occupy many of the top spots. Few of those executives are boldface names, however.
While Jamie Dimon, JPMorgan Chase’s chairman and chief executive, appears to be the second-highest-paid banker, at $17.6 million, one of his subordinates collected nearly as much: Ina R. Drew, JPMorgan’s chief investment officer.
Drew, whose correct calls on interest rates helped the bank earn several billion dollars of profit, was paid about $13 million.
Despite the spotlight on Blankfein’s pay at Goldman, little was said about how much Gordon Nixon of Royal Bank of Canada received. His paycheque was roughly the same amount as Blankfein’s, $9.7 million, though he is hardly a household name.
The Equilar analysis provides an early peek at 2009 pay and is not a comprehensive review. For consistency, any stock or options that were subject to performance hurdles were valued at the target levels; in practice, many executives receive larger payouts for surpassing the company’s financial goals.
Wells Fargo posted strong results, even as it struggled to contend with rising mortgage and commercial real estate losses and accepted a bailout from the government in 2008.
As it rebounded last year, the bank dribbled out the details of its large stock grants for Stumpf. In August, Wells announced that he would receive $900,000 in salary and about $6.5 million in various types of restricted stock. On New Year’s Eve, Wells issued a statement saying that Stumpf would receive another allotment of so-called performance shares— worth up to $15.4 million.
That means his pay package could easily top $24 million in a year in which Wells was among the last of the big banks to repay the bailout money.
“We believe we have the very best leadership team in financial services today, and a key to retaining that talent for the long term is to compensate our senior leaders competitively and to align their interests with those of our shareholders,” Stephen W. Sanger, who leads Wells Fargo’s compensation committee, had said in a statement last December.
On pay, Wall Street seems to have reverted to its old ways. James P. Gorman, Morgan Stanley’s new chief executive, could receive $11-13 million even though the company posted an annual loss.
Mark Lake, a Morgan Stanley spokesman, said that Gorman received that compensation because, as president, he was responsible for integrating the vast Smith Barney brokerage unit and for being the prospective chief executive.
Bank of America’s highest-paid executive was the chief architect of its ill-fated acquisition of Merrill Lynch, Gregory L. Curl. He was awarded more than $9.2 million in stock, most of which will be paid out monthly over the next three years.
Brian T. Moynihan, Bank of America’s new chief executive, will be paid about $6.1 million, thanks to a similar large stock grant.
Jefferies Group, a midsize investment bank that had a strong year, rewarded its top executives handsomely. And more pay is coming down the pike. In mid-January, Handler received a $39 million stock grant and another executive received about $29 million. The stock award, subject to certain performance goals, is payable over the next three years and will come on top of any salary and bonuses the executives get.
One of the highest compensated financial executives for 2009 was paid well when he was employed—and then even more when he quit. After leaving Visa in July, Hans Morris, the company’s president, collected an exit package valued at $24 million.
“The ride is essentially over, and he is still getting grants,” said Brian Foley, an independent compensation consultant.
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