Thanks to new BIPRU rules on remuneration disclosure, the accounting departments of London’s leading banks must operate with the transparency of a glass house. The 2013 compensation structures of financial giants like Morgan Stanley, Citi, Bank of America and JPMorgan reveal exactly how much reward comes with risk-taking. Citibank leads the pack in salaries and sign-on bonuses, while Goldman Sachs has the highest value in salary and cash bonuses combined.
1/ Citibank paid an average salary of $802,000 (£524k) with an average cash bonus of $263,000 (£172k). The average value of deferred stock and deferred cash bonus paid was $1 million (£660k). Unlike Goldman, Morgan Stanley and JP Morgan, Citi paid out £2.14m in sign-on bonuses.
2/ Goldman Sachs paid an average salary of $721,000 (£471k) with an average cash bonus of $879,000 (£574k). The average value of a restricted stock bonus was $3.4 million (£2.2m). Goldman Sachs eliminated all sign-on bonuses in 2013.
3/ Morgan Stanley paid an average salary of $600k (£392k) with an average cash bonus of $234,000 (£153k). The average value of deferred stock and deferred cash bonus paid was $1.7 million (£1.1m), with no sign-on bonuses issued in 2013.
4/ JPMorgan paid an average salary of $455,000 (£297k) with an average cash bonus of $404,000 (£264k). The average value of deferred cash and stock and ‘withheld cash’ was only $1.47k (£962k). JPMorgan eliminated all sign-on bonuses in 2013, as it did the year prior.
5/ Bank of America paid an average salary of $396,000 (£259k) with an average cash bonus of $455,000 (£297k). The average value of deferred stock and deferred cash bonus paid was $1.7 million (£1.1m). Bank of America was the only company to beat out Citi in the sign-on bonus category, with £12.7m paid in 2013.
Banks use a combination of non-employee committees and external pay consultants to determine the compensation structures of their offices, though the criteria vary from company to company. Banks like Citi use more subjective criteria at the individual level, assigning values to employee traits like “common purpose,” “ingenuity,” and “responsible finance.”
JPMorgan uses more objective criteria to evaluate performance, based on business results, achievement of stated client goals, and risk and control outcomes. Goldman’s firm-wide evaluation structure is more formulaic, considering factors like ROE, net earnings, book value per share, and non-compensation spending.
Others like Morgan Stanley and Bank of America use a hybrid system of both subjective and objective criteria to evaluate individual employees. Financial performance includes measurable results on the product or service, while subjective “behavior ratings” measures the employee’s teamwork and leadership abilities.