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Big Bank Bonus Facts: 2011

Seven big banks – Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, US Bank, and Wells Fargo – are set to dole out year-end bonuses in the coming weeks. The banks do not release data on compensation until early next year, but it is possible to estimate the size of this year’s compensation pool based on data from the first three quarters of 2011 (note that compensation pools include salaries, benefits, and bonuses).

Press reports have suggested that Wall Street bankers will face a pay cut this year, but based on figures from the third quarter, compensation pools at the big banks are on track to be slightly larger than last year’s record breaking number: a combined $156 billion in total compensation.[i]

Key Facts

• $156 billion. The seven banks are projected to pay $156 billion in compensation in 2011, a 3.7% increase from last year’s combined compensation pool ($151 billion).
• A Good Year? Six of the seven banks set aside more money for compensation through the first three quarters of 2011 than they did in the first three quarters of 2010.
• Goldman Sachs. Goldman Sachs’s compensation pool has decreased by 13% in 2011, but the bank’s 38,900 employees are still projected to receive an average of $362,862 in compensation.
• Bank of America. Despite a dismal year, Bank of America set aside 7% more compensation through the first three quarters of 2011 than it did during the first three quarters of 2010.
• JPMorgan Chase. Investment bankers at JPMorgan Chase are projected to make $386,148 in 2011, in contrast to employees in the bank’s retail financial services division, many of them tellers, who are projected to make an average of $61,130.

Projected Compensation Pools 

The banks release information on the size of their compensation pools at the end of each quarter (note that compensation pools include salaries, benefits, and bonuses).

Table 1: Projected Compensation Pools

Source: SEC 10-Q (quarterly report) filings for each bank. Projected 2011 compensation pool is calculated assuming the Q4 compensation allocation is equal to the average compensation allocation of the previous three quarters.

• The New Bottom Line coalition has estimated that the big banks could write down the principal of underwater mortgages at a one-year cost of $71 billion saving underwater families an average of $543 per month, pumping billions into the economy and creating one million jobs.[ii] The banks have the money – this year’s compensation pool is projected to be more than double that.

• The big banks could spend the $71 billion on principal reduction and still have enough money to pay their employees average compensation of $68,553.[iii]

Investment Banker Compensation

Compensation at the big banks varies significantly from division to division. At JPMorgan Chase, for example, employees in the investment banking division are projected to make an average salary of $386,148 in 2011, as opposed to employees in the retail financial services division, who are projected to make an average $61,130.[iv]

Neither Goldman Sachs or Morgan Stanley have retail banking arms, so the average compensation for employees at those banks is significantly higher than it is at banks that employ thousands of tellers. Goldman Sachs’s 36,800 employees are projected to make an average of $362,862.

Table 2: Average Compensation at Selected Investment Banks

Source: SEC 10-Q (quarterly report) filings for each bank.

* JPMorgan Chase’s figures are for its investment banking division (as opposed to its entire compensation pool). Other big banks do not break out headcounts and compensation by division, so this figure is impossible to determine.

• The income threshold for the top 1% of income earners in the US starts at $386,000.[v] The average employee in the JPMorgan Chase investment services division will make the cut this year at $386,148.  The average Goldman Sachs employee just misses, with average compensation of $362,862.  If the data were available to exclude the lower paid clerical and support staff at these companies, there is little doubt that investment bankers at all of the big banks would be firmly ensconced in the 1%.

CEO Compensation (2010)

 CEO compensation figures will not be available for several months. Below are figures for each big bank CEO for last year, as well as a breakdown of each CEO’s hourly wage, based on a 2,000 hour work year.

Table 3: CEO Compensation at Big Banks in 2010

* This figure is for Pandit’s 2008-2010 compensation package. 

• JPMorgan Chase CEO Jamie Dimon made enough last year to restore after-school programming for 20,000 children (employing 2,000 people) in his native New York State.[xiv]
• Wells Fargo CEO John Stumpf makes enough in one hour to pay the average tuition of a public four-year university (average tuition: $8,244).[xv]
• It takes the average Bank of America teller 441 hours, or 11 weeks of work, to make what Bank of America CEO Brian Moynihan made in one hour last year ($5,000).[xvi]
• Morgan Stanley CEO James Gorman made as much in 9 minutes last year as the average Social Security recipient receives in a month ($1,082).[xvii]
• Contract drivers at American ports make $28,783 a year – what Goldman Sachs CEO Lloyd Blankfein made in just over three hours last year. Goldman Sachs has been targeted by the Occupy movement for its ownership of port terminal operator SSA Marine and its sweatshop-like conditions.[xviii]

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