Bankers deposit a pretty penny
(20 January 2010 – Australia) JP Morgan has announced a substantial US$9.3 billion (A$10.06 billion) pay day for its investment banking employees.
On a per-employee basis, JP Morgan investment bankers, sales staff and traders are set to come out with an annual salary of around US$379,000 for last year, an increase of more than US$100,000.
Despite the global financial crisis the investment bank has one of its strongest years and Michael Cavanagh, chief financial officer, JP Morgan, told reporters that even though pay is up overall, the investment bank still reduced the percentage of revenue set aside for pay from 62 percent in 2008 to 33 percent.
Kenneth Raskin, head of the law firm, White & Case’s executive compensation practice, said that people looking at it from the outside only looking at the dollars and say they are high. There is no question the dollars are high, however the question is whether the bankers are deserving.
Banks across the industry have changed their compensation plans to give managers more of their pay in the form of stock that must be held for multiple years. This sort of deferred compensation was meant to curb traders and others from taking short-term risks that could harm the investment bank several years later.
Changes in compensation plans, however, have done little to bring down overall pay figures and quell public outrage over pay.
This is amplified by the fact that the average US household only earns an income of US$50,303 and many are facing foreclosure.
The banking industry could be faced with the Federal Deposit Insurance Corporation’s (FDIC) proposal that could see US banks paying higher fees for risky pay practices and President Obama’s new tax to recoup the funds used to bailout the banks that our now paying obscene bonuses.
It is expected that the United States other large banks Goldman Sachs Group and Morgan Stanley, who both report results next week, will also reveal large pay packets to their bankers.
Despite the global financial crisis the investment bank has one of its strongest years and Michael Cavanagh, chief financial officer, JP Morgan, told reporters that even though pay is up overall, the investment bank still reduced the percentage of revenue set aside for pay from 62 percent in 2008 to 33 percent.
Kenneth Raskin, head of the law firm, White & Case’s executive compensation practice, said that people looking at it from the outside only looking at the dollars and say they are high. There is no question the dollars are high, however the question is whether the bankers are deserving.
Banks across the industry have changed their compensation plans to give managers more of their pay in the form of stock that must be held for multiple years. This sort of deferred compensation was meant to curb traders and others from taking short-term risks that could harm the investment bank several years later.
Changes in compensation plans, however, have done little to bring down overall pay figures and quell public outrage over pay.
This is amplified by the fact that the average US household only earns an income of US$50,303 and many are facing foreclosure.
The banking industry could be faced with the Federal Deposit Insurance Corporation’s (FDIC) proposal that could see US banks paying higher fees for risky pay practices and President Obama’s new tax to recoup the funds used to bailout the banks that our now paying obscene bonuses.
It is expected that the United States other large banks Goldman Sachs Group and Morgan Stanley, who both report results next week, will also reveal large pay packets to their bankers.
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