Top bankers got annual pay hikes of 12% despite crisis

 

TOP US and European bankers, including Jamie Dimon of JP Morgan Chase and Vikram Pandit of Citigroup, have enjoyed annual pay rises averaging almost 12 per cent, despite widespread falls in profits and share prices, Financial Times research shows.

The news comes as concern on both sides of the Atlantic over chief executive pay levels has led to several high-profile investor revolts, including at Citi and Barclays, and as Europe’s leaders debate a cap on bank bonuses.

The analysis by Equilar, a US research group, of pay awarded to 15 bank chiefs shows they received an average 11.9 per cent pay rise last year to an average $12.8 million (€10.2 million), the second rise in a row. But the pace of growth has slowed.

Bankers such as Brian Moynihan at Bank of America, Mr Pandit and Mr Dimon enjoyed the largest gains. Mr Dimon, whose reputation as one of the best managers in banking has been hit by a $2 billion trading loss in a supposedly safe division of JP Morgan, topped the list for the second year in succession with a $23.1 million pay package that was 11 per cent higher.

The Equilar analysis added up base salaries, cash bonuses and certain other benefits. It also included option and stock awards granted in 2011, some of which rewarded performance in previous years. It shows that fixed salaries continue to rise while variable cash payments are sinking as regulators clamp down on bonuses. But average stock and option awards rose 22 per cent.

“Regulators try to prevent banks from taking the outsize risks that led to the financial crisis. But the problem is that shareholders still like outsize returns,” said Albert Laverge, Egon Zehnder’s global investment banking practice head.

Mr Pandit’s pay rose to $14.9 million after the $1 salary he took in the previous two years. He had pledged restraint until the bank returned to profitability, which it did in 2010.

His pay package, which ranks in the middle of the FT survey, sparked an investor revolt at Citigroup’s annual meeting in April which, in turn, triggered a shareholder uprising against executive pay levels in Europe and the US.

In Britain, Bob Diamond at Barclays came second in the survey with a $20.1 million pay package that was inflated by a £5.75 million (€7.13 million) tax bill that was paid by the bank.