Wall Street Pay: Where's The Shareholder Rage?
According to the Wall Street Journal, Wall Street pay is back and better than ever. Firms are expected to dole out $144 billion in compensation and benefits this year, a record high and a 4 percent increase from 2009.
This will no doubt drive folks on Main Street crazy, because they will rightly feel like banks who survived the financial crisis due to taxpayer largess in the form of TARP, are back on track, while the rest of the country is left grappling with sagging home prices and retirement accounts that are far from their pre-crisis highs.
Sadly, there's little to be done now. The Obama Administration missed its opportunity to push for Wall Street compensation reform when it forked over TARP funds with far-too-few strings attached. At the moment when the President could have stepped on the collective throats of Wall Street execs, he wimped-out. None of us should be surprised that these firms are back to their old ways--as the sagacious Jessica Rabbit said, "I'm not bad, I'm just drawn that way."
But here's a question that begs to be asked when it comes to Wall Street's pay practices: where is the shareholder rage? According to the WSJ:
Overall, Wall Street is expected to pay 32.1% of its revenue to employees, the same as last year, but below the 36% in 2007. Profits, which were depressed by losses in the past two years, have bounced back from the 2008 crisis. But the estimated 2010 profit of $61.3 billion for the firms surveyed still falls about 20% short from the record $82 billion in 2006. Over that same period, compensation across the firms in the survey increased 23%.Let's review: Wall Street profits are down 20 percent from the top, but compensation is up by 23 percent. Shareholders, this is how you have been compensated from 2006 to yesterday's close:
- JP Morgan Chase 10/11/2010: $39.73 (vs. 12/29/2006: $48.30)
- Goldman Sachs 10/11/2010:$152.20 (vs. 12/29/2006: $199.35)
- Morgan Stanley 10/11/2010: $25.15 (vs. 12/29/2006: $81.4)
- Bank of America 10/11/2010: $13.15 (vs. 12/29/2006: $53.39)
- Citigroup 10/11/2010: $4.18 (vs. 12/29/2006: $55.70)
Image by Flickr User stopnlook, CC 2.0
