Wall St.’s Biggest Bonuses Go to Not-So-Big Names

[YankeeFan]

The big name firms on Wall St. are trying to be modest (at least what they consider modest) with bonuses for their CEOs.

But some of the firms not under intense scrutiny don't seem to be so modest:

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. Mr. Stumpf was paid a personal best of $18.7 million in cash and stock for 2009 — up 64 percent from 2007, just before the financial crisis struck.

Mr. Stumpf is making twice as much as Lloyd C. Blankfein, his counterpart at Goldman Sachs. Mr. 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 like Mr. Blankfein usually take home far more than staid bankers like Mr. 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.

Mr. Stumpf and other executives have moved up the pay ladder partly because the likes of Mr. 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, Mastercard Worldwide, Capital One Financial and American Express. 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 and Citigroup.

Ajay Banga, the president of MasterCard Worldwide; Laurence D. Fink, the chairman and chief executive of the giant money management company BlackRock; 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.

http://www.nytimes.com/2010/02/11/business/11bonus.html?hp

Then there's the curious comments by our President who appears to have decided that beating up on Wall St. "Fat Cats" isn't the answer to every problem (and can be detrimental to fundraising).

QUESTION: Let’s talk bonuses for a minute: Lloyd Blankfein, $9 million; Jamie Dimon, $17 million. Now, granted, those were in stock and less than what some had expected. But are those numbers okay?

THE PRESIDENT: Well, look, first of all, I know both those guys. They’re very savvy businessmen. And I, like most of the American people, don’t begrudge people success or wealth. That’s part of the free market system. I do think that the compensation packages that we’ve seen over the last decade at least have not matched up always to performance. I think that shareholders oftentimes have not had any significant say in the pay structures for CEOs.

QUESTION: Seventeen million dollars is a lot for Main Street to stomach.

THE PRESIDENT: Listen, $17 million is an extraordinary amount of money. Of course, there are some baseball players who are making more than that who don’t get to the World Series either. So I’m shocked by that as well. I guess the main principle we want to promote is a simple principle of “say on pay,” that shareholders have a chance to actually scrutinize what CEOs are getting paid. And I think that serves as a restraint and helps align performance with pay.

The other thing we do think is the more that pay comes in the form of stock that requires proven performance over a certain period of time as opposed to quarterly earnings is a fairer way of measuring CEOs’ success and ultimately will make the performance of American businesses better.

http://theplumline.whorunsgov.com/political-media/what-obama-said-about-those-bonuses/

 

[The Big Ragu]

Saying shareholders don't have any significant say in the pay structures for CEOs is the same as me saying I don't have any significant say in the executive orders the president signs. Shareholders vote for boards of directors who are the ones who choose CEOs and structure their pay. If you own shares and are unhappy with the board or its decisions, vote for a new board at the annual meeting or organize a takeover that gets others on board--presumably because you can make the case that the company is poorly run and shareholders aren't being rewarded. If you are a small shareholder and feel that is impossible, no one is forcing you to own shares in a company you don't think is well run. Why would you? But as long as your shares give you a vote and control over the board, you have as much a say as, for example, any of us have over a decision the president makes. We elected him too.