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 2017, meaning we know exactly how much they paid their most important staff over 12 months ago. The pertinent data from each bank's filing is shown below. Bonus figures are only for bonus awarded in 2017 and don't include earlier bonuses that vested last year.
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.
Allowances to regulated staff? Yes. Goldman pays cash allowances to most regulated staff affected by the EU bonus cap (although some get stock allowances).
Deferral policy? Stock bonuses are typically deferred over three years, with amounts vesting equally on the first, second and third anniversaries of the award date. However, some regulated staff at Goldman in London get their stock bonuses deferred for five years, and senior managers have to wait for seven years until bonuses are fully vested. Even after stock bonuses have vested, individuals are also required to retain around 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 2017: 618, plus 30 senior managers. This is fewer than in 2016, when there were 724 regulated staff in the UK.
Average salary (fixed remuneration) paid to each member of UK regulated staff in 2017: $702k (down from $838k in 2016, and from $1.1m in 2015.) Pay figures are for the average member of regulated staff, not including senior managers.
Average cash and stock bonus paid to each member of UK code staff in 2017 (based on share price at the end of the year): $614k.
Average total compensation for UK code staff in 2017: $1.16m. Down from $1.4m in 2016. Pay figures are for the average member of regulated staff, not including senior managers.
Total value of sign-on bonuses paid during 2017: Goldman Sachs International made eight sign-on payments in 2017, up from four one year previously. The highest sign-on payment to any new hire was $4.6m.
Distribution of compensation among code staff earning more than 1m euros at Goldman Sachs in 2017:
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 2017, 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: 713 in 2017 (including 51 senior managers.) This was up from 672 in 2016.
Average salary (fixed remuneration) paid to each member of UK regulated staff in 2017: $707k. Down from $784k in 2016.
Average bonus paid to each member of UK code staff in 2017: $633k. Down from $737k in 2016.
Average total compensation for UK code staff in 2017: $1.34m. Down from $1.5m in 2016. Pay figures are for the average member of regulated staff, not including senior managers.
Distribution of compensation among code staff at J.P. Morgan in 2017:
3. Pay at Citigroup Global Markets in 2017
Which external pay consultant does Citi use? Not stated.
Criteria used to determine pay at Citi? Year over year business performance, performance compared to plan for the year, performance against key risks, performance relative to peers. Citi updated its appraisal process to give control personnel more influence over material risk taker pay.
Deferral policy? Material risk takers at Citi have their bonuses deferred for three years, after which they're subject to a further retention period of six to twelve months.
Number of regulated staff in the UK in 2017: 469 in the Institutional Clients Group at Citigroup Global Markets, 15 in support functions, nine in control functions, and nine senior managers.
Average salary (fixed remuneration) paid to each member of UK code staff in 2017: £437k ($558k).
Average bonus in 2017: £485k ($619k)
Total average compensation for Citi UK code staff in 2017: $1.2m
Distribution of compensation among code staff at Citi in 2017:
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. (BAML says, "Employees receive two ratings – a Result rating (based on objective metrics such as business performance) and a Behavior rating (based on subjective metrics such as contributions to the 4 Company, leadership, conduct, teamwork, etc.). The scale for both ratings is Exceeds Expectations, Meets Expectations, and Does Not Meet Expectations.")
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: 581 in 2017, down from 612 in 2016.
Average salary (fixed remuneration) paid to each member EU regulated staff in 2017: €547k ($626k). Up from €518k in 2016.
Average bonus for regulated staff in 2017: €403k. Down from €498k in 2016.
Total average compensation for BAML EU-regulated staff in 2017: €950k ($1.1m). Down from $1.2m in 2016.
Distribution of compensation among code staff at BAML in 2017:
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? In line with UK regulations, senior managers at Morgan Stanley have a minimum seven year deferral, with vesting starting in year three, Risk managers have a five year deferral (with vesting starting in year one) and all other regulated staff have a three year deferral.
Number of regulated staff in the UK? 446 (including 36 in senior management and control functions). Up from 431in 2016.
Average salary (fixed remuneration) paid to each member of UK code staff in 2017: £491k ($626k) (down from £496k in 2016).
Average bonus for regulated staff in 2017: £629k ($801k). Up from £550k in 2016.
Total average compensation for Morgan Stanley UK code staff in 2017: $1.4m, the same as for 2016. Pay figures are for the average member of regulated staff, not including senior managers.
Distribution of compensation among code staff at Morgan Stanley in 2017:
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