Current Account: Banks' Size Counts More On CEO Pay

The issue of pay will be front and center in the next two weeks when shareholders participate in nonbinding votes on executive pay at Goldman Sachs Group Inc., Morgan Stanley and J.P. Morgan Chase & Co. One of the two main firms that advises pension funds on these matters, Glass, Lewis & Co....

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Bibliographic Details
Published inThe Wall Street journal Asia
Main Author Guerrera, Francesco
Format Newspaper Article
LanguageEnglish
Published Hong Kong Dow Jones & Company Inc 13.05.2014
Subjects
Economic crisis
Executive compensation
Stockholders
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Summary:The issue of pay will be front and center in the next two weeks when shareholders participate in nonbinding votes on executive pay at Goldman Sachs Group Inc., Morgan Stanley and J.P. Morgan Chase & Co. One of the two main firms that advises pension funds on these matters, Glass, Lewis & Co., has recommended "no" votes on all three, arguing that the banks' performance doesn't justify the 2013 pay packages. (The other one, Institutional Shareholder Services Inc., is urging "yes" votes.) The eight financial groups deemed "globally systemic" (i.e. capable of threatening the world's economy) have seen total returns rise by a median of 38% since 2009, according to KBW. By contrast, banks considered "domestically systemic," such as U.S. Bancorp, PNC Financial Services Group and SunTrust Banks Inc., had median total shareholder-return growth of more than 100%. Judging by the market valuations of the two groups, that gap will continue. In a statement, Citigroup said its strategy "is designed to leverage our unique footprint to generate returns for our shareholders and for that reason alone." The bank added that its pay structure, which was redesigned last year, "better aligns compensation with performance and shareholder returns."