Stronger wealth management earnings than in 2020 yielded higher compensation last year for the CEOs of 10 of the largest firms in the industry.
J.P. Morgan Chase CEO Jamie Dimon led the field with ease by tens of millions of dollars after the impact of a huge “one-time special award” and the continued growth of the firm’s wealth management arms, according to Financial Planning’s analysis of the companies’ 2022 proxy statements. Firms like it and rivals such as Bank of America’s Merrill, Morgan Stanley, Wells Fargo, LPL Financial, Raymond James and Ameriprise set pay with an eye toward aligning their compensation with the firm’s results.
“The way that we as compensation consultants and our clients typically look at executive pay, we want to ensure that we are paying competitively for the CEO position to ensure that the organization is meeting its business goals and thereby driving shareholder value creation,” said Ed Steinhoff, a managing director with Pearl Meyer who works with several banks and insurance companies. “All of that has driven a very competitive market for talent.”
In many cases, companies “recalibrated to adjust” their executive compensation in 2021 after the coronavirus wiped out a lot of their earnings a year earlier, according to Eric Labourdette, a principal at ClearBridge Compensation Group.
“What happened in 2021 was still somewhat reflective of COVID times,” Labourdette said. “You did see a bounceback in terms of that performance and in terms of that compensation program in 2021 recognizing that so many companies had been hurt in 2020.”
Base CEO salaries rose about 3% last year, with larger increases under incentive pay provisions of the executives’ compensation agreements, according to Steinhoff.
“We definitely have seen higher incentive pay for 2021 performance than we did for 2020 performance,” Steinhoff said. “In 2021, we saw a pretty nice recovery of financial and operational results as organizations figured out how to work through the pandemic, and so we saw much stronger results in 2021 than we did in 2020.”
Note: Each of the firms shared executive pay in their 2022 proxy statements or 2021 annual reports. Total compensation in standardized tables required by the SEC for a company’s named executive officers may vary from a firm’s “direct compensation” to its CEO or other measures disclosed in annual documents. The calculations depend on the current value of stock units, the timing of vesting or exercising of options and other factors. For example, one firm below disclosed lower total compensation for a CEO in 2021 but listed a higher amount in direct pay.
To see a list of 10 bank CEOs who reeled in big raises for 2021, click here. To see how 10 of the largest wealth managers paid their top executives and what they disclosed to shareholders about the CEO’s pay package last year, scroll down our slideshow.