Two top Wall Street chiefs celebrate $314m share bonanz…

The men running two of Wall Street’s biggest banks saw the value of their shareholdings rise by a combined $314m in 2016 as stock market prices rocketed in the aftermath of Donald Trump’s election as US president.

But while Jamie Dimon and Lloyd Blankfein each enjoyed $150m-plus rises in the value of their stock and options in JPMorgan Chase and Goldman Sachs, respectively, the average gains for the other 18 best-paid chief executives at international banks last year was $4m.

Following Mr Trump’s victory on November 9, shares in US banks soared — for example Goldman’s stock price increased 24 per cent in the last seven weeks of 2016. By contrast, Deutsche Bank’s share price fell 23.5 per cent last year, leading to a drop in CEO John Cryan’s stock-related holdings of more than $4.5m for the year.

The Financial Times and consultancy Equilar’s annual review of bank chief executives’ pay also found that the average remuneration for the 20 CEOs last year was about $12.5m, lower than 2015’s $14.2m. 

Bank of America boss Brian Moynihan bucked the trend with a 23 per cent pay rise to $20m a year, bringing his salary into line with other Wall Street bosses.

Mr Dimon was also the world’s best-paid banker for the second year in a row, with $28.2m of pay, bonus and pension contributions last year.

Mr Blankfein, who was best paid in 2013 and 2014, had the third-highest package in 2016: his $22.3m came in just behind James Gorman’s $22.5m for running Morgan Stanley. 

Roman Matousek of Kent Business School University said that despite legislative efforts after 2007 to be more transparent about pay, “the way the remuneration packages are set remains roughly the same and very opaque”.

The average pay for CEOs in Europe was $8.5m, less than half the amount of their US rivals. The lowest paid of the CEOs was BNP Paribas’s Jean-Laurent Bonnafé, who received $4.5m last year for running Europe’s third-biggest bank by market value. His pay, however, was up 13.9 per cent year on year. 

The next lowest paid was Mr Cryan, who received $5.2m for the often thankless job of turning round Deutsche Bank. Credit Suisse’s Tidjane Thiam was ultimately awarded $9.9m, after shareholder outrage prompted an embarrassing 40 per cent cut to the initial bonus agreed for him and his top executives. 

“One of the traps that financial services can fall into is thinking that money is the only important thing [to attract talent],” said Paul Lee, head of corporate governance at Aberdeen Asset Management. “There’s pretty decent evidence that at times paying more money . . . encourages them to behave in a less appropriate way.”

The biggest rise among the Europeans was HSBC’s Stuart Gulliver, whose pay was up 32 per cent in constant currency terms, according to Equilar’s figures.

The bank said the rise was largely caused by Mr Gulliver’s move to a new long-term incentive plan, which attracted a different treatment from Equilar to his old awards under a group performance share plan. Without this change in treatment, his pay would have been up 4.5 per cent. 

Lloyd Blankfein, chief executive of Goldman Sachs © Bloomberg

A 33 per cent cut to chief executive pay at scandal-hit Wells Fargo lowered the US average; their new chief Tim Sloan received a package of $12.9m for 2016 based on an annualised salary when he became CEO last October. 

His predecessor John Stumpf was paid $19.3m in 2015, before the bank uncovered a massive fake accounts scandal that cost it $185m in fines and wiped more than 10 per cent from its share price from September to October 2016. 

“As we saw in the run-up to the 2008 financial crisis, massive CEO bonuses and incentive-based pay rewarded short-term profits at the expense of the economy and taxpayers,” said Congresswoman Maxine Waters, a Democrat and ranking member of the US’s House Committee on Financial Services.

“This sort of risky behaviour is exactly why Democrats crafted Sections 954 and 956 of the Dodd-Frank Wall Street Reform and Consumer Protection Act to claw back erroneously awarded CEO pay. Regulators must move quickly to implement these provisions so executives at banks like Wells Fargo aren’t rewarded when their institutions engage in abusive and predatory schemes,” she added.

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