Bank CEOs Give Themselves a Big Pay Raise in 2010 Guess How Much Bank CEO Pay Increased in 2010 Bank CEOs Give Themselves a Big Pay Raise in 2010 Guess How Much Bank CEO Pay Increased in 2010
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Bank CEOs Give Themselves a Big Pay Raise in 2010 Guess How Much Bank CEO Pay Increased in 2010

by Alex Goldmark

May 27, 2011

Now that the outrage at Wall Street is fading and the ire of Congress is twisting toward public unions, banks are rewarding their leaders with big pay bumps.

Bloomberg Markets magazine reviewed CEO pay at the top 50 financial companies in the United States to see if executive pay lined up with market performance. Guess what, it doesn't, in many cases, the top dogs earned more, even when their companies lost money.

Bank CEO pay jumped 26 percent in 2010 after two years of decline. That's almost exactly the same as CEOs overall, according to a survey released last month by USA Today that found executives got an average pay raise of about 27 percent, while the rest of us barely edged out inflation with a 2 percent raise.

We had some reason to hope that the banking sector might not follow the broader trend since the economic wounds of the financial collapse are still so raw, many finance companies has required executives to forgo bonuses as a sign of good will in a tottering post-bailout economy. But apparently, that era of courteous restraint is over.

In some cases, it seems like CEOs are getting extra pay to make up for the bonuses and options they forfeited when the harsh spotlight demanded restraint. 

Two bank executives saw their pay rise more than 10-fold. ... JPMorgan Chase ... paid CEO Jamie Dimon $20.8 million, an increase of 1,474 percent over 2009...  Goldman Sachs Group Inc.’s board paid CEO Lloyd Blankfein $14.1 million, an increase of 1,276 percent from 2009... JPMorgan investors earned a total return for 2010 of 2.3 percent; Goldman Sachs, 0.5 percent.

According to Bloomberg Markets, pay rose even for when a company's results weren't so hot. 

The big pay hikes for bank and asset management CEOs were awarded amid flat or sinking 2010 share prices. [Larry] Fink [the highest paid finance CEO of all, at BlackRock Capital], Blankfein, Dimon, Morgan Stanley CEO James Gorman and [Bryant] Moynihan of Bank of America all made Bloomberg Markets’ list of financial executives who provided the least shareholder value in 2010.

And lest you think this is a peculiarly American problem, a recent British report found that CEO pay is booming there too, adding to a long term widening of the wealth gap in the U.K. The organization that conducted the study, The High Pay Commission, released an interim report on executive pay in the U.K. earlier this month, with this frightening chart. 

The goal of executive pay reformers isn't to stop CEOs from earning a good salary, it's to make sure they're gains don't come at the expense of the rest of us. It doesn't have to be that way.

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Bank CEOs Give Themselves a Big Pay Raise in 2010 Guess How Much Bank CEO Pay Increased in 2010