Bonus season not as festive for bank CEOs

NEW YORK -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.

Financial stocks were some of the worst performing in 2011. While the S&P 500 Index finished the year flat, Morgan Stanley shares plunged 44 percent, JPMorgan dropped nearly 22 percent and Goldman Sachs Group Inc. tanked 46 percent.

Compensation followed the downward trend. 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 shed 700 workers last year and capped the amount that workers can get in their bonuses immediately, deferring anything over $125,000. Rival Goldman eliminated 7 percent of its employees and cut 2011 pay by 21 percent.

And it appears the banks' CEOs are not immune. On Friday, Morgan Stanley's regulatory filing showed that the value of Gorman's stock award for the year dropped to $5.1 million from $10.2 million in 2010.

Gorman, who became CEO two years ago, has been slimming down the bank, selling off units like a mortgage servicing division and an asset management business. He's been emphasizing divisions like wealth management, which provide smaller returns than some investment banking operations but also carry a lot less risk because they're based on fees rather than markets. Unlike JPMorgan and some other big banks, Morgan Stanley doesn't have a large consumer deposit base to rely on when its investment bank stumbles.

JPMorgan's Dimon received restricted stock worth $12.6 million and stock appreciation rights reportedly valued at roughly $5 million for 2011, according to a filing with the Securities and Exchange Commission Friday. That compares with about $17.1 million in stock and SARs that he was granted for 2010.

For the full year, JPMorgan posted a record profit of $19 billion, up from $17.4 billion in 2010. But the bank struggled amid the choppy financial markets, which hurt investment banking fees in the fourth quarter. The bank also disclosed that it spent $3.2 billion last year to fight lawsuits, almost all of them over poorly written mortgages. That's down from $5.7 billion in 2010, but Dimon acknowledged there's still a "huge drag" on earnings five years after the bubble burst.

Complete compensation details, including the value of the executives' 2011 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.

[B_Erhart]

Banksters meet RICO in a fair world. Since banksters bought the whole
government - not going to happen. Late Leona Hemsley's 'little' people will go to jail for unpaid debts.

[smittyc]

The banks did not make any profits. They just use accounting gimmicks. Housing prices have dropped 32% from their high, the banks are handling millions of foreclosures. They have just kept the old home prices on their books, refusing to take a loss on paper. What lies ahead? Well the government is now, right this minute demanding that 27 banks, JP Morgan Chase is one to provide a bank breakup plan. Others are Citi, Sun Trust BBT Bank of America.

[you_MAY_be_right]

"the banks are handling millions of foreclosures. They have just kept the old home prices on their books,..."


Add also that now many of the foreclosed homes are falling into need for repair due to no one doing maintenance, slabs are cracking and homes needing foundation repair.

Add to this that many homes could have been saved if the banks, rather than pursuing their continued ARMs would had trimmed down their expected profits and refinanced at a lower set loan; keeping buyers in the house and PAYING MONTHLY for their homes many homes wouldn't have been destroyed.

[ibsteve2u]

I don't necessarily believe that they in fact received smaller bonuses...why should I, when for some reason Cayman Islands banks are so useful that even Republican Presidential candidates use them?

Is more than one way to move money "to and fro".

[commenter777]

And the banking corporations that stole from us all thru mortgage fraud like in the 2010 Academy Award winner "Inside Job", that you can download free from demonoid, etc, are not going to get into any legal trouble at all for their felonies. Their corporations are going to be fined is all the punished these elite-rich will get. And the reason for this is because they own the political and judicial systems in this country. Our legal system does not even have enough control over the actions of the ultra-rich in this country to punish them personally for felonious fraudulent
activity. This country is crooked to the core. There is no such thing as justice anymore in the United States. This is not the same country I was born in. The new definition of "justice" is "just us ultra-rich". They stole from us all and they will get away with it again and again because that is now legal to steal from the middle-class.

[MegaProcrastination]

I know and it's downright sickening. I have no sympathy for the CEOs and their smaller bonuses. They still got more money than most of us will ever see in a lifetime.