Among investment banks, Standard Chartered is not known as a massive payer. Last week's Standard Chartered remuneration report suggested this might not be the case after all.
In 2012 Standard Chartered was particularly generous towards Mike Rees, the head of its investment bank. Last year, Rees earned a total of $12.2m, including a $1.2m salary, a $1.8m cash bonus, $1.8m in upfront shares, $5.4m in a deferred bonus and $1.7m in performance share awards.
Rees looks exceptionally well paid compared to Colm Kelleher, head of Morgan Stanley's investment bank. Morgan Stanley's proxy statement, also released last week, revealed that Kelleher earned 'only' $8.6m for 2012 and that very little of that was paid in upfront cash.
Kelleher's compensation comprised a $777k base salary, a $2.4m equity award, a $5.6m deferred cash award, and $3m in terms of a long term incentive plan which will 'deliver value' over a three year period only if certain targets are met. Unlike Rees, Kelleher got no cash bonus at all.
Moreover, while equity awards for executives at Morgan Stanley vest over five years according to the bank's proxy statement, at Standard Chartered deferred bonuses are paid in shares which vest over three years only. At Standard Chartered, therefore, Rees effectively received $4.8m in cash or cash-like instruments and has to wait only three years for the rest. At Morgan Stanley Kelleher received $777k in cash and has to wait between three and five years for the remainder, with no guarantee that $3m of that will become available. Rees seems to have by far the better deal.
Standard Chartered's generosity wasn't restricted to Rees. As the table below (taken from Standard Chartered's annual report) shows, ten employees below board level at Standard Chartered were paid between four and ten million dollars last year, with around a third of each person's compensation paid in cash or cash-like instruments. The Sunday Times also pointed to the $1m of benefits in kind paid to Standard Chartered directors Steve Bertamini, head of consumer banking, and Jaspal Bindra, chief executive officer Asia. While other banks have cut back on expat perks, Standard Chartered still pays school fees and rent for its expats, said the Times.
If Rees and Kelleher's pay are indicative of pay throughout the banks they work for, Standard Chartered's investment bankers are earning far more than their rivals at Morgan Stanley. As a US-based bank, Morgan Stanley isn't required to produce a table like the one below from Standard Chartered, so direct comparisons are impossible. However, pay is certainly under pressure at Morgan Stanley, where costs are high and Chief Executive James Gorman has said on several occasions that investment bankers should earn less.
Standard Chartered didn't return a request for comment on its pay and Morgan Stanley declined to comment. Christian Robbins, chief executive of UK-based financial services search firm Cherry Bull, said Standard Chartered's big pay packages don't necessarily apply across the organisation. "My understanding is that they're not an outstanding payer in investment banking," said Robbins. "Standard Chartered pays in particular markets like the Far East, where they have a competitive advantage, but they don't pay well in London."
US banks like Morgan Stanley are typically more generous, said Robbins: "At the moment, the whole investment banking compensation market is split between high paying tier one US banks and the rest," he added.
Source: Standard Chartered