Who says crime doesn't pay?Of course we know that the lion’s share of this compensation will go to a small number of senior management banksters. Taxpayers & shareholders both get left holding the bag as per usual. JP Morgan missed analyst’s expectations despite the fact that analysts have already set the bar real low. Now what happens when/if BMO misses analyst’s expectation after senior management looted the trough? Is a share price of under $50 possible? I would say YES but by that time I will be stopped out. GLTA
Who said crime doesn't pay?
JPMorgan Sets Aside $378,600 Per Investment Banker (Update1)
By Michael J. Moore and Elizabeth Hester
Jan. 15 (Bloomberg) – JP Morgan & Chase Co, the second- largest U.S. bank, set aside $9.3 billion for compensation and benefits for investment-bank employees in 2009, enough to pay each worker in that unit $378,600.
The reserve is 33 percent of the investment bank’s revenue for the year, compared with 62 percent in 2008, New York-based JPMorgan said today on its web site. That’s the lowest proportion allocated for pay since JPMorgan merged with Bank One Corp. in 2004.
Chief Executive Officer Jamie Dimon set aside $549 million for compensation costs in the fourth quarter, the least amount since at least 2004, as banks face public rancor over the size of bonus pools after receiving taxpayer funds during the financial crisis. President Barrack Obama called bank bonuses “obscene” yesterday as he outlined a tax on 50 of the largest financial firms to recoup bailout costs.
“If he’s bringing comp down, I think he’s saying we are not going to lose people and we owe shareholders a higher return,” Jason Tyler, a senior vice president at Ariel Investments in Chicago, which owns about 280,000 JPMorgan shares, said in a Bloomberg Television interview.
JPMorgan Chief Financial Officer Michael Cavanaugh said on a conference call with analysts that the firm’s bonus pool was reduced in anticipation of the U.K.’s 50 percent tax on banks paying discretionary bonuses of more than 25,000 pounds ($40,000).
Dimon defended his pay practices at a Jan. 13 hearing of the Financial Crisis Inquiry Commission. He said senior executives receive most of their compensation in stock and are required to hold 75 percent of equity awards they are granted.
Full-Year Compensation Costs
Payment of bonuses in stock as opposed to cash lowers the expense firms have to record on their income statements because the cost often isn’t realized until the shares vest. Compensation for individual workers may be higher if they collect the shares they are awarded.
JPMorgan’s investment-banking revenue more than doubled to $28.1 billion for the year from 2008, the company said today as it announced a $3.28 billion quarterly profit.
The bank’s full-year compensation costs were 21 percent below Macquarie Group analyst David Trone’sestimate of $11.8 billion, and less than the $11 billion Ladenburg Thalmann analyst Brad Ball expected.
Goldman Sachs Group Inc., which announces results on Jan. 21, set aside $16.7 billion, or enough to pay each employee at the entire firm $527,192, for the first nine months of 2009.
JPMorgan had 24,654 employees in the investment bank as of Dec. 31. The bank has 222,316 workers across its divisions. For 2008, the investment bank set aside $7.70 billion, or enough to pay $275,646 to each of the 27,938 workers at the time.
Banks including Citigroup Inc., Morgan Stanley and UBS AG increased salaries for some employees last year as they adjusted bonus policies amid public and political outrage. JPMorgan said in July that investment bankers who received half or more of their total compensation in year-end bonuses would see higher salaries beginning this year.