Playing for Pay: How Did Big Financial CEOs Stack Up in 2011?

Executive compensation vs. performance still looks out of joint

Playing for Pay: How Did Big Financial CEOs Stack Up in 2011?

FutureOfFinancials185redux Playing for Pay: How Did Big Financial CEOs Stack Up in 2011?When Citigroup (NYSE:C) CEO Vikram Pandit got his hand slapped in April while sifting around in the compensation cookie jar, it might have set off some alarm bells in the corner offices of other banking CEOs.

Or maybe not. Beauty — in this case, in the form of profits and stock performance — is indeed in the eyes of the shareholders. Or in the case of Citigroup and most other companies, the executive compensation committee.

Make no mistake about it: Citi’s compensation group was ready and willing to approve Pandit’s compensation package, valued at almost $15 million, despite a miserable year for shareholders, who saw C shares lose 46% for 2011.

Does Pandit’s rejection portend things to come? That’s hard to say of course, but a good place to start is a look at who gets paid what, and what that paycheck looks like relative to returns on stock price and equity.

Let’s look at six financial giants, all of whom (either willingly or not) accepted Troubled Asset Relief Fund monies back in 2008-09. As each CEO waits for decisions on compensation for 2012, decide for yourself if they were worth 2011′s money. In each case, their compensation values are based on total compensation, which includes salary, bonus, stock options and any other baubles or perks that can be valued.

Brian Moynihan, Bank of America

2011 Compensation: ~$8 million

BankOfAmerica 185 Playing for Pay: How Did Big Financial CEOs Stack Up in 2011?Bank of America (NYSE:BAC) CEO Brian T. Moynihan presides over one of the biggest and most persistently troubled of the TARP players. Moynihan earned a total compensation package of about $8 million (although that number is hard to actually quantify) — not great by peer standards, but not bad for a guy whose company generated a 0.07% return on assets and a 0.04% return on equity, and lost a whopping 58% of its stock value.

Vikrim Pandit, Citigroup

2011 Compensation: ~$14.9 million

Citigroup Playing for Pay: How Did Big Financial CEOs Stack Up in 2011?Citigroup (NYSE:C) CEO Vikrim Pandit’s troubles already are out in the open, but you surely couldn’t blame his shareholders for just a little bit of a revolt. Citi’s 0.59% return on assets was paltry, although a 6.31% return on equity was a nice jolt. Investors shook off the cobwebs, though, when they realized they suffered a 44% loss in their shares despite paying Pandit his nearly $15 million package.

Lloyd Blankfein, Goldman Sachs

Goldman Sachs Playing for Pay: How Did Big Financial CEOs Stack Up in 2011?2011 Compensation: ~$16.1 million

Goldman Sachs (NYSE:GS) CEO Lloyd Blankfein is the virtual poster child for executive excess, and his company constantly is lampooned as the “vampire squid” of finance. Blankfein’s nearly $16 million pay package isn’t insubstantial, so investors might want to take another look on the next go-around. Goldman’s 0.48% return on assets and 3.65% return on equity were decent enough, but GS shares spiraled downward to the tune of 46% last year.

Jamie Dimon, JPMorgan Chase

JPMorgan185 Playing for Pay: How Did Big Financial CEOs Stack Up in 2011?2011 Compensation: ~$23.1 million

JPMorgan Chase (NYSE:JPM) CEO Jamie Dimon comes in with the biggest overall compensation package, valued at around $23 million, but judge him on results and maybe investors won’t feel too badly. JPMorgan’s 0.87% return on assets and 10.2% return on equity are close to the top of our field, even though JPM shares still managed to lose 21% during the year.

Dimon’s pay package was just reaffirmed at the company’s shareholder meeting last week, despite the disastrous (if not financially, certainly from a PR standpoint) loss of billions on hedging strategies. No matter. Shareholders seem to believe in Dimon through thick and thin.

James Gorman, Morgan Stanley

MorganStanley185 Playing for Pay: How Did Big Financial CEOs Stack Up in 2011?2011 Compensation: ~$13 million

Morgan Stanley (NYSE:MS) CEO James Gorman stepped into some tough shoes when he took the CEO chair in 2010. Gorman’s stock has soared over the years, and his compensation package of $13 million shows what the board thinks of his efforts — even if he “deferred” some of it during the year. Indeed, a 0.66% return on assets and 3.2% return on equity is a fine job — although a market loss of 44% to the stock and issues with the Facebook IPO might make some others think twice in 2012.

John Stumpf, Wells Fargo

Wells Fargo Playing for Pay: How Did Big Financial CEOs Stack Up in 2011?2011 Compensation: ~$19.8 million

By virtually every measure, Wells Fargo (NYSE:WFC) CEO John Stumpf has trumped his peers. A nearly $20 million compensation package is a nice way to reward a 1.26% return on assets and 12% return on equity, both best in their class. An 11% loss in WFC shares is by far the lowest among these names — a nice position to play from.

Marc Bastow is an Assistant Editor of InvestorPlace. As of this writing, he did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/2012/05/playing-for-pay-how-did-the-bank-ceos-stack-up-in-2011-bac-c-gs-jpn-ms-wfc/.

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