You work for JPMorgan and receive a bonus of $250k, $500k, or $1m. How much will you get now? How much will you need to wait for? How are JPMorgan bonuses structured?
As with Goldman Sachs, JPMorgan offers minimal information on the structure of variable pay in its proxy statement or annual report. As a U.S. investment bank, it's less bound than European banks to offer detailed pay information, and as with all banks JPMorgan is tight-lipped on its pay.
The charts below are therefore derived from conversations with headhunters who have placed individuals at JPMorgan, or who have extracted employees from the bank and made a note of their compensation structure. These charts have not been verified by the bank. And they do not apply to JPMorgan's London and continental European-based code staff, who are legally compelled to receive at least 40% of their compensation in the form of stock and deferred cash. We know from JPMorgan's most recently available regulatory filing (from 2012) that it has around 126 code staff in London, who receive around 80% of their bonuses in deferred instruments. On the whole, however, it seems that the rewards at JPMorgan are far more immediate...
Below $250k, headhunters tell us that little - if any - of JPMorgan's bonuses are deferred. We've added a 10% deferral in the chart above, although it seems that in JPMorgan's markets business, salespeople and traders are likely to receive all of their bonuses at this level in cash.
JPMorgan's deferrals last for three years, with 50% paid in year two and 50% paid in year three.
At $500k, we understand that JPMorgan's deferrals are again minimal. In the markets division, headhunters tell us that only 15% of bonuses below $1m are typically deferred. This figure appears to be higher in corporate finance and M&A, however, where vice president-level staff reportedly receive 35% of their bonuses in deferred instruments. In the chart below, we've put the average deferral at this level at 20%.
Again, deferrals vest 50% in year two and 50% in year three.
Headhunters tell us that JPMorgan's deferrals only really start to become significant once bonuses exceed $1m. Even then, deferrals are modest compared to European banks. Between $1m and $2m, we understand that 35% of bonuses are deferred. Beyond $2m, we understand that 50% of bonuses are paid in cash and 50% are deferred.
Again, deferred stock at JPMorgan vests 50% in year two and 50% in year three. However, JPMorgan's most senior staff also receive share options which vest 20% per year over a five year period.