Executive Compensation

[HenryTo]

This will continue to be an area of hot debate for years to come:
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Study shows U.S. bank CEO pay dwarfs rest of world
Wed Sep 23, 2009 10:43am EDT

By Steve Eder
NEW YORK (Reuters) - You wouldn't know it by his pay stubs, but Jiang Jianqing heads the world's largest bank.

Jiang, chairman of Industrial and Commercial Bank of China, made just $234,700 in 2008. That's less than 2 percent of the $19.6 million awarded to Jamie Dimon, chief executive of the world's fourth-largest bank, JPMorgan Chase & Co.

The contrast illustrates the massive differences in pay among the CEOs of the world's top banks. The compensation of the CEOs of the largest U.S. banks towers above what's paid to banking chiefs in other parts of the world, according to a Reuters analysis of pay at the 18 biggest banks by market value.

Excessive compensation at banks is expected to be discussed this week when the Group of 20 nations meets in Pittsburgh. But consensus on the issue remains a distant hope as there continue to be vast differences in how bankers are paid, from the CEO on down.

The United States is home to four of the nine largest banks in the world -- JPMorgan, Bank of America Corp, Wells Fargo & Co and Citigroup Inc. It is also home to four of the six most handsomely rewarded bank CEOs.

"The U.S. executive pay levels have always dwarfed pay for companies elsewhere in the world," said Sarah Anderson, a fellow with the Institute for Policy Studies, which is critical of Wall Street, and co-author of the recent study "America's Bailout Barons."

"They have claimed it is impossible to recruit people without paying such compensation. Yet, if you look at the pay levels in Europe and in a lot of Asian countries, somehow they manage to find people who can run major global firms while making a fraction of what they make in the U.S.," she said.

"BASICALLY NOTHING"

China, for example, boasts three of the world's four biggest banks, yet the leaders of those banks -- Industrial and Commercial Bank of China, China Construction Bank Corp and Bank of China -- are among the lowest paid of those surveyed by Reuters. The chairman and the president of each of the banks are paid roughly $230,000 per year.

"That's basically nothing for the leaders of these huge Chinese financial institutions," said Laura Thatcher, who leads law firm Alston & Bird's executive compensation practice in Atlanta. "I can't imagine why they would work for nothing."

So how, exactly, do the Chinese do it?

The Chinese banks, which are state-controlled, are typically led by bureaucrats appointed by the central government, and executive pay is capped.

Being the head of a Chinese bank does come with perks, just like running a U.S. bank. The top Chinese bank executive gets such non-cash benefits as a car, driver, medical insurance, food and housing. Experts note that many American and European executives receive similar benefits.

Some of the Chinese bank executives may be willing to accept the pay level of a top government official in the hope of moving into a powerful political position in the future.

But the executives also feel the consequences of a global downturn, just like some of the U.S. CEOs who were forced to skip bonuses or accept reduced salaries in the past two years.

ICBC's Jiang took a 10 percent pay cut in 2008, even as ICBC's profit jumped 36 percent to $16.23 billion.

LOST IN TRANSLATION?

Aside from China, all of the banking CEOs included in the survey made at least $1 million last year. Total compensation included publicly disclosed bonuses, stock awards, options and other perks.

HSBC Holdings, the world's third-largest bank by market capitalization, paid CEO Michael Geoghegan $2.8 million in 2008 -- much more than his Chinese counterparts but far less than JPMorgan paid Dimon.

Outside the United States, the highest-paid bank CEO works for Banco Santander SA, which has the seventh-largest market cap and paid Alfredo Saenz $13.66 million for 2008.

Royal Bank of Canada paid Gordon Nixon $9.5 million, while Australian CEOs Ralph Norris of Commonwealth Bank of Australia and Gail Kelly of Westpac Banking Corp made $8 million and $7.4 million, respectively.

Japan's biggest bank, Mitsubishi UFJ, did not release the pay details of its CEO.

Alan Johnson, a Wall Street compensation consultant with Johnson Associates, said much is lost in translation when comparing CEO pay from country to country.

And that will make it difficult for world leaders to find consensus at the G20 summit.

"Different cultures, different disclosures," Johnson said. "It just highlights the difficulty across the world in trying to make far-reaching pay decisions."

To Anderson, though, comparing bank CEO pay around the world makes the issue much more clear-cut.

"These kinds of figures undercut the main argument by the U.S. financial industry lobby that they will lose top talent to competitors in Europe or Asia," Anderson said.

[rffrydr]

Businessweek just ran a piece on the "up-shopping" that goes on with company boards and CEO compensation. "One day a rain will come and wash this stree clean."

--Travis

Gimme Japan:

http://www.businessweek.com/globalbiz/content/feb2009/gb20090210_949408.htm
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Citi...hah! Shareholders, hear us (almost) roar!
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Maybe it really is, "what the market will bear"--in humility!

http://www.johnkay.com/2012/02/15/basketball-shows-high-banker-pay-not-a-slam-dunk

[rffrydr]

[rffrydr]

Yeah it's great to able to play with other people's money. And when compensation pushes 75% of revenues who exactly is the shareholder? Answer: bagholder.

The good news is they only have to kill the whales to bring back some kind of balance.
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Finally--investment banking compensation is cut further.

http://www.bloomberg.com/news/2012-01-24/bank-of-america-is-said-to-warn-investment-bankers-of-25-compensation-cut.html

[rffrydr]

How 'bout Wall St. investors occupy Wall St.? You really do have the power.

http://ftalphaville.ft.com/blog/2011/10/21/708981/its-not-the-banks-its-the-bankers-contd/
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Giant Squid with its many tentacles cudda put out just about any number but they to took the loss. Why? Bonus Culture set up for a fall.

RBS cancels Xmas party....if they'd done that three years ago maybe someone would have cut them some slack.
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

In a world of every conceivable ratio this is one number too far:

[rffrydr]

"Consequences" are back in. But I luv this part:

[rffrydr]

Just read that H. Paulson was able to skirt the cap-gains tax selling out on his way to Treas Sec. This, by the good graces of senior Bush. Who says public service cannot be lucrative?!
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Do we really have to leave this to the nuns?!

http://www.economist.com/node/18529845?story_id=18529845

[rffrydr]

Reaching out of the black-hole of bankruptcy for their bonuses!

Borders Group Inc. is proposing bonus programs for 42 top executives and managers. The book retailer says it already lost 25 “significant corporate employees” since the Chapter 11 case began in mid-February.

The hearing to approve the program is set for April 14.

The chief executive could receive a maximum bonus of almost $1.7 million. The top five executives in total could take home $7.1 million.

For the top five, the bonuses would be 90 percent to 150 percent of base salary, for an average of $623,000. The amount of the bonuses will be determined by when the company files a Chapter 11 plan or sells the business as a going concern. There will be no bonuses for a liquidating plan or a sale of the assets to liquidators.
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

http://www.guardian.co.uk/business/2011/mar/27/dutch-bankers-bonuses-axed-by-people-power/print

[rffrydr]

HSBC's got a new CEO: indicates 55% cost/income ratio ‘unacceptable’ and indicated need to ‘re-engineer.’
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Today is the Tomorrow you worried about Yesterday!