Bankers and Their Bonuses
Published: February 5, 2011
Bankers are done with contrition. Lloyd Blankfein, chief executive of Goldman Sachs, paid himself a $12.6 million stock bonus for 2010, 40 percent more than in 2009, despite plummeting profits. Brian Moynihan of Bank of America got $9 million in restricted stock despite the bank’s $2.2 billion loss.
An analysis by The Wall Street Journal found that pay and benefits at the top 25 publicly traded banks and security firms on Wall Street hit a record of $135.5 billion.
This return of outsize self-remuneration suggests more needs to be done to tame bankers’ appetite for high-risk financial strategies that shower them with profit in good times and leave the taxpayers holding the bag when their bets go bad.
That’s why bankers almost never have as bad a year as the rest of us. In 2009, during the worst of the financial crisis, average pay in finance in New York City fell 18 percent, about twice as much as pay in other industries. But that average pay was still about 2.5 times as much as workers made in other businesses and is bouncing back much faster.
Not all of the news on financiers’ pay is bad. Banks are using more deferred compensation, to encourage top bankers to think of the long term. Barclays Bank took this one step further, rolling out a plan to pay 2010 bonuses for its senior bankers with contingent convertible bonds, or “cocos”— which could give bankers even more of an incentive to make prudent decisions.