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Salaries and bonuses for top performers at Goldman Sachs, JPMorgan, Citigroup, BAML and Morgan Stanley in London

Salaries and bonuses US investment banks

Once, it was a mystery how much banks paid their top performers. – Headhunters had information as did pay benchmarking firms, but the data was always parsed through third parties. Nowadays, we know exactly how much banks pay their most valued staff in London by virtue of the British BIPRU rules on remuneration disclosure.

The BIPRU rules state that all banks operating in London, U.S. banks included, must disclose the amounts they pay their risk takers and the structure of those risk takers’ compensation. These disclosures are typically made up to a year after those payments were made. Goldman, JPMorgan, Citi, Bank of America and Morgan Stanley have all now lodged their disclosures for 2015, meaning we know exactly how much they paid their most important staff 12 months ago. The pertinent data from each bank’s filing is shown below.

The key takeaways are as follows:

      • In response to regulatory pressure, most banks continue to increase the number of employees categorized as ‘regulated staff.’  As juniors are added to the regulated staff pool, this is helping to cut average pay (Goldman Sachs excepted).
      • Whichever way you look at it (salary or bonus) Goldman Sachs pays its London risk takers by far the most. Average compensation per head for material risk takers at Goldman’s London business was $2.7m in 2015. This compared to $1m at Morgan Stanley.
      • All banks pay their material risk takers a proportion of their bonuses in deferred stock. Most of these regulated staff have therefore benefited significantly from banks’ increasing share prices over the past six months.

1. Pay at Goldman Sachs International (in 2015)

Which external pay consultant does Goldman use? Semler Brossy Consulting Group LLC

Criteria used to determine pay at Goldman’s investment bank? At the business area and individual level, Goldman looks at pre-tax income, lost business, revenue and backlog, client team and activity, relationship lending history, ‘principalling’, key transactions, as well as franchise accretion. At the firm-wide level, it takes into consideration ROE, diluted earnings per share, book value per share, net earnings, net revenues, spending on compensation, the proportion of revenues that are spent on compensation, and non-compensation spending.

Deferral policy? Stock bonuses are deferred over three years, with amounts vesting equally on the first, second and third anniversaries of the award date. However, even after stock bonuses have vested, individuals are also required to retain 100% (after tax) of their restricted stock units for up to five years after the award date. Goldman bankers are banned from hedging against their vested shares during this period.

Number of regulated staff in the UK in 2015: 512 (compared to 529 in 2014, 121 in 2013 and 115 in 2012).

Average salary (fixed remuneration) paid to each member of UK code staff in 2015: $1.1m (up from $903k in 2014, $721k in 2013 and $749k in 2012.)

Average non-stock (cash) bonus paid to each member of UK code staff in 2015:  $193k (down from $286k in 2014, $879k in 2013 and $1m in 2012.)

Average value of restricted stock paid to each member of UK code staff in 2015 (including bonus and fixed allowance):  $1.4m – based on current share price (up from $834k in 2015. Down from $3.4m (£2.2m) in 2013.)

Total value of sign-on bonuses paid during 2015:  Goldman Sachs is doing away with sign-on payments. It only made three in 2015 and the highest one comprised 5,000 restricted stock awards. This was down from 31,000 restricted stock units paid to one person in 2014.

Total average compensation for Goldman Sachs code staff in 2015 (based on current share price):  $2.8m (£2.3m) (up from $2.3m in 2014).

Distribution of compensation among code staff at Goldman Sachs in 2015 (at time of issuance – more people have since been bumped into higher pay brackets by the rising share price): 

Goldman Sachs salaries and bonuses

2. Pay at J.P Morgan in the UK (in 2015) 

Which external pay consultant does J.P. Morgan use? Not stated.

Criteria used to determine pay at J.P. Morgan’s investment bank? Financial results, risk and control outcomes, client/customer goals (where appropriate), people and leadership objectives.

Deferral policy? J.P. Morgan doesn’t provide information on pay structure for 2015, but in the past Managing Directors at the bank were subject to a 35% minimum deferral irrespective of their level of compensation. Restricted stock units vest over three years, but vesting is skewed towards the end – 50% vest in year two and 50% vest in year three.

Number of regulated staff in the UK:  644 in 2015.(Up from 586 in 2014, 209 in 2013,126 in 2012.)

Average salary (fixed remuneration) paid to each member of UK code staff in 2015: $749k (Up from $455k (£297k) in 2013 and £326k in 2012.)

Average non-stock (cash) bonus paid to each member of UK code staff in 2015: $189k (Up from $162k in 2014, down from $404k in 2013 and £361k in 2012).

Average value of stock bonuses awarded to each member of UK code staff in 2015: $769k (up from $508k in 2014).

Total average compensation for J.P. Morgan UK code staff in 2015:  $1.1m (£890k) (down from $1.4m in 2014).

Distribution of compensation among code staff at J.P. Morgan in 2015 (at time of issuance – more people have since been bumped into higher pay brackets by the rising share price): 

JPMorgan distribution 2015

3. Pay at Citi in the UK (in 2015)

Which external pay consultant does Citi use? Frederic Cook & Co.

Criteria used to determine pay at Citi? At the individual level, Citi rewards staff for ‘common purpose’, ‘ingenuity’ (defined as ‘enhancing clients’ lives through innovation that harnesses the breadth and depth of our information, global network, and world-class products,’) ‘leadership’, and ‘responsible finance’. It’s also updated its evaluation process so that control personnel feed into the performance evaluations of material risk takers.

Deferral policy? Citi’s deferrals are generally for four years. However, some senior staff have three year deferral periods with an additional six months of transfer restrictions, during which they can’t sell the stock.

Number of regulated staff in the UK:  670 (up from 612 in 2014, 182 in 2013 and 190 in 2012.)

Average salary (fixed remuneration) paid to each member of UK code staff in 2015:  $467k (down from $601k in 2014, ,from $802k in 2013 and $834k in 2012.)

Average non-stock (cash) bonus paid to each member of UK code staff in 2015: $266k (down from $307k in 2014).

Average value of deferred stock paid to each member of UK code staff for 2015: $296k (up from $283k in 2015)

Total average compensation for Citi UK code staff in 2015: $980k (£796k). (Down from $1.2m in 2014).

Total value of sign-on bonuses paid in 2015: Citi paid £830k in guaranteed bonuses in 2015.

Distribution of compensation among code staff at Citi in 2015:

Citi pay distribution

4. Pay at Bank of America across the EU (in 2015)

Which external pay consultant does BAML use? Farient Advisors LLC.

Criteria used to determine pay at BAML? BAML staff in Europe are awarded bonuses based upon their results and their behaviour. They receive a rating for each.

Deferral policy?  Longer term equity-based pay awards are deferred over three years and must be retained for a further six months after vesting.

Number of regulated staff across the EU:  455 in 2016 (up from 389 in 2014).

Average salary (fixed remuneration) paid to each member EU regulated staff in 2015: $688k (up from $636k in 2014)

Average non-stock (cash) bonus paid to each member of UK code staff in 2015: $67k (down from $80k in 2014).

Average value of deferred stock and deferred cash bonus paid to each member of UK code staff in 2015:  $567k (up from $526k in 2014).

Total average compensation for BAML EU-regulated staff in 2015:  $1.3m (£1.1m) (up from $1.2m in 2014).

Distribution of compensation among code staff at BAML in 2015:

Bank of America distribution

5. Pay at Morgan Stanley International (in 2015) 

Which external pay consultant does Morgan Stanley use? Not stated.

Criteria used to determine pay at Morgan Stanley?  On an individual basis, Morgan Stanley looks at contribution to revenue and profitability (whilst taking risk into account), teamwork, management abilities (including the ability to attract and retain core talent), at technical skills, adherence to core franchise values and business principles and policies and at market conditions.

Deferral policy? Morgan Stanley pays deferred cash bonuses spread over three years. It also pays stock bonus awards which vest after six months and Long Term Incentive Programme Awards which vest after four years – but only if minimum performance conditions relating to the company’s stock have been met.

Number of regulated staff in the UK? 404 (up from 383 in 2014, 116 in 2013).

Average salary (fixed remuneration) paid to each member of UK code staff in 2015:  $522k (down from $781k in 2014 and $600k in 2013).

Average non-stock (cash) bonus paid to each member of UK code staff in 2015: $286k (down from $393k in 2014, up from $234k in 2013).

Average value of deferred stock bonus in 2015: $262k (down from $297k in 2014).

Total average compensation for Morgan Stanley UK code staff in 2015: $1m (down from $1.5m in 2014).

Distribution of compensation among code staff at Morgan Stanley in 2015:

Morgan Stanley distribution

Photo credit: dollar close UP by Shai Barzilay is licensed under CC BY 2.0.

Comments (3)

Comments
  1. Perhaps these high reward earners belong to the so called elite class and are able to get “close” networked individuals for business which the normal high calibre professional cannot get and are adequately rewarded. Professionals look elsewhere and demand your price well.

  2. Same goes for asset management companies. Portfolio managers at my old shop weren’t classified as code staff whereas the Head of HR for example was….

  3. Not very useful information without a further breakdown by seniority level… How much does a VP actually make compared to a MD in absolute terms?

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