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Record profit doesn't equal bigger bonus for JPMorgan CEO, Morgan Stanley cuts CEO stock award
NEW YORK (AP) ' JPMorgan Chase, the nation's largest bank, posted a record profit for 2011. That didn't translate into a bigger bonus for CEO Jamie Dimon. Morgan Stanley's latest quarterly results topped expectations as the bank trimmed costs and cleaned up problems dating from the financial crisis. But CEO James Gorman saw the value of his stock awards for the year fall by half.
Across their ranks, Wall Street banks are curbing bonus pay for last year's performance, which was marked by big drops in stock prices and still-hefty costs for mortgage-related problems. In the last three months of the year, fear about the European debt crisis made the stock and bond markets volatile, and clients of all the major banks shied away from mergers and acquisitions and public offerings of stock. That sharply reduced investment banking and underwriting fees. The banks also faced a surge in populist anger, as the Occupy Wall Street movement went national.
Goldman Sachs has said it slashed 2011 compensation by 21 percent. In a closely watched and politically charged gauge, JPMorgan Chase & Co. revealed earlier this month that it set aside 36 percent less than the year before to pay its investment bankers. Morgan Stanley has said it capped the amount that workers can get in their bonuses immediately, deferring anything over $125,000.
And it appears the banks' CEOs are not immune. On Friday, regulatory filings showed that the value of Gorman's stock award dropped to $5.1 million from $10.2 million in 2010. Dimon received restricted stock worth $12.6 million and stock appreciation rights reportedly valued at about $5 million. That compares with about $17.1 million in stock and SARs that he was granted for 2010.
A Thursday filing showed that Citigroup Inc. CEO Vikram Pandit received a $3.6 million stock award. Pandit took a $1 salary after Citi needed a bailout to weather the financial crisis, and last year the bank gave him a multi-year bonus package that could be worth nearly $23.4 million if a series of performance goals are met.
Complete compensation details, including the value of the executives' cash compensation, perks and benefits weren't disclosed. None of the banks have filed annual proxy statements, which include those financial details.
Dimon received a total pay package for 2010 valued at $20.8 million, including a salary of $1 million and a cash bonus of $5 million. Gorman received compensation valued at $15.2 million, including a salary of $800,000 and a cash bonus of $3.9 million.
The Associated Press formula calculates an executive's total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.
The value that a company assigned to an executive's stock and option awards for 2010 was the present value that the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives depends on the performance of the company's stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified length of time to receive shares or exercise options.