Bank revenue “may not heal” this year and companies are running out of ways to continue reducing credit costs to boost earnings per share, Najarian wrote.
Global regulators pushed banks after the 2008 crisis to overhaul bonuses by delaying payouts and making them subject to clawbacks. The shift is meant to discourage employees from taking outsize risks for quick rewards. The deferred-stock grants ended up benefiting workers who typically prefer cash, said Steven Hall, a founder of Steven Hall & Partners, a New York-based executive-compensation consulting firm.
“Think of everybody that’s been paid equity since the stock market fell apart in 2008, 2009, and they’ve been getting it with vesting of three or five years,” Hall said. “They’ve been forced into the stock. They’ve got a pretty decent deal.”
Morgan Stanley shares jumped 64 percent last year after the firm required senior bankers and traders to defer their entire 2012 bonus, of which half will be paid in stock. The policy, described last January by a person briefed on the decision, applied to employees who made more than $350,000 and got incentive pay of at least $50,000.
The firm now plans to pay a larger share of bonuses for 2013 in cash, the Wall Street Journal reported on Dec. 23, citing unidentified people familiar with the plans. Analysts tracked by Bloomberg predict New York-based Morgan Stanley will rise 3.6 percent over the next 12 months.
That’s near the average 3.8 percent increase that analysts forecast for the six biggest U.S. banks -- JPMorgan, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley -- in 2014, according to data compiled by Bloomberg. And it’s about 1/10 the average 39 percent gain in their shares last year.
CEO Pay
Most large U.S. banks make stock the biggest piece of their chief executive officers’ compensation, setting it to vest over years. For Goldman Sachs CEO Lloyd C. Blankfein, 59, restricted stock accounted for 63 percent of his $21 million pay package for 2012, not including a $5 million cash incentive tied to future performance, according to company filings. Shares of the New York-based firm rose 39 percent last year, boosting the value of Blankfein’s award for that year by $3.4 million.
JPMorgan CEO Jamie Dimon, whose pay for 2012 was cut in half to $11.5 million after the board faulted his oversight of botched derivatives bets, got $10 million in restricted stock units. Shares of the New York-based lender climbed 33 percent last year, giving Dimon, 57, a $2.6 million profit on paper.
Wells Fargo granted CEO John Stumpf, 60, more than $12.5 million in equity-linked incentives last year. The San Francisco-based firm advanced 33 percent last year. Bank of America CEO Brian T. Moynihan, 54, was awarded three types of restricted stock totaling $11.05 million. Shares of the Charlotte, North Carolina-based company increased 34 percent last year. Citigroup gave $6.27 million of so-called performance share units and deferred stock to CEO Michael Corbat, 53. The New York-based bank rose 32 percent in 2013.