It’s never been a better time to be a Wall Street CEO.
Median CEO compensation in 2012 totaled $9 million, a 6.9% year-over-year increase, reports The Wall Street Journal.
As CEO pay went up, so did shareholder return: the median value was 7.6% for these same firms. The Journal defines compensation as “salary, all bonuses, and the value of equity at the time it was granted” and shareholder return as “share-price changes and the value of dividends.”
Some CEOs did extraordinary well last year, specifically John Donahoe of eBay (EBAY), Jeffrey Immelt of General Electric (GE), Jim McNerney of Boeing (BA) and Kenneth Chenault of American Express (AXP). All of the aforementioned chief executives brought home more than $20 million in 2012.
Donahoe’s total compensation nearly doubled to $29.7 million from $16.5 million; Immelt’s pay rose 20% to $25.8 million; Chenault saw his total compensation jump 24% to $28.5 million and McNerney’s rose 15% to $21.1 million. Boeing’s board awarded the generous compensation package to McNerney before serious battery problems and fuel leaks grounded the company’s new Dreamliner jets. Boeing stock is trading at a five-year high.
CEO compensation may be returning to pre-financial crisis levels but companies are also aligning executive pay more closely to stock and financial performance.
“More than half of the compensation awarded to 51 CEOs last year was tied to their companies' financial or stock-market performance,” according to The Wall Street Journal and consulting firm Hay Group.
At the same time, Wall Street executives are also getting special perks and bonuses if they leave their jobs to become public servants in Washington. A study by the Project on Government Oversight found that several Wall Street firms including Morgan Stanley (MS), Goldman Sachs (GS), The Blackstone Group (BX), JPMorgan (JPM) and Citigroup (C) offer high-level employees stock rewards and other financial windfalls if they become government officials.
“Companies may be fueling the revolving door and making it easier for their alumni to gain influence over public policy,” writes Michael Smallberg, the study’s author. “These companies seem to be giving a special deal to executives who become government officials. In exchange, the companies may end up with friends in high places who understand their business, sympathize with it, and can craft policies in its favor.”
Former Wall Street executives who became high-ranking government employees include:
- Treasury Secretary Jack Lew
- Former Treasury Secretary Hank Paulson
- Former deputy secretary of state for management and resources Thomas Nides
- Former under secretary of state for economic growth, energy and the environment Robert Hormats
- Former Fannie Mae Chairman and CEO Franklin Raines.
The study says Morgan Stanley’s executives are eligible to receive a bonus if they go to work for a “governmental department or agency, self-regulatory agency or other public service employer." JPMorgan provides its executives with a stock award from the executives' long-term plan if they accept “a full-time position in an elected or appointed office in local, state, or federal government...not reasonably anticipated to be a full-career position.”
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