Tomorrow, Jes Staley will officially join Barclays as CEO. The ex-CEO of J.P. Morgan's investment bank and ex-managing partner of hedge fund BlueMountain Capital Management will be handsomely paid for his efforts. Staley's salary alone at Barclays will be £1.2m, plus £1.15m in 'role-based' shares, plus a cash payment equal to a third of his salary, plus bonuses and long term share awards of up to £2.75m and £2.2m respectively.
In total, Staley stands to earn up to £8.25m ($12.4m) a year at the British bank. This looks diminutive compared to Jamie Dimon ($27m), but generous compared to the £7.6m paid to Stuart Gulliver at HSBC, the £2.7m paid to Ross McEwan at RBS, and the £5.5m paid to his predecessor Antony Jenkins last year.
If pay for the CEO at Barclays is rising, does this mean pay for Barclays' rank and file investment banking employees will increase too? After all, profit before tax at the investment bank rose 31% year-on-year in the first nine months of 2015, and the bank's beleaguered fixed income professionals have substantially outperformed their peers (as have Barclays' less beleaguered investment bankers) this year. Indeed, given the shrinking of Barclays' bonus pool since 2010, it might seem about time that Barclays' bankers were given a reprise by their new, highly paid, leader.
This looks like wishful thinking. Much as Staley might be inclined to rehabilitate bonuses and broader compensation at Barclays' investment bank, his hands are tied.
Firstly, Barclays is constrained by the ever-tighter European Union bonus rules, which may yet require it to redefine some of its very generous fixed allowances as salary. Something it's like to balk at for fear of committing to higher fixed costs.
Secondly, John McFarlane, the 'gruff Scott' and Barclays chairman, who hired Staley is vociferously anti-bonuses and thinks bankers are paid too much. Staley won't be in any position to dispute that.
And thirdly, Barclays' investment bank still needs to cut costs. In the final quarter, the cost income ratio in the investment bank was 81%.
Ian Gordon, banking analyst at Investec, says the investment bank will need to do the 'heavy lifting on costs' across Barclays in the next 24 months and that £0.6bn (11%) is likely to come out of the investment bank alone between now and 2017. Much of this will be result of lower bonus deferrals from previous years, says Gordon. But Barclays' cost issue will also restrict Staley's ability to pay generously in future: "Incrementally, pay at Barclays' investment bank needs to be down year-on-year," says Gordon.
It's bad luck for Barclays' bankers therefore. Just because their new CEO is being paid more, it doesn't mean they will be too.