Human Capital & Careers

Banks Paying Top Compensation Dollars

Senior managers working for financial institutions are earning big bonuses and large amounts of restricted stock. They're also enjoying huge gains ...
Stephen TaubMarch 9, 2004

It’s becoming increasingly clear that brokerage firms and banks were among the best places to be a top executive in 2003, at least from a compensation standpoint.

According to the proxies flying off the printing presses in anticipation of the heavy annual-meeting season, finance and other top executives at financial institutions were more likely to receive a big bonus, huge amounts of restricted stock, and/or large gains from resulting from the exercise of stock options.

For example, David Moffett, vice chairman and CFO of US Bancorp, earned more than $4.6 million last year, including more than $3.3 million from exercising stock options.

His boss, chairman and chief executive officer Jerry Grundhofer, fared better. He made more than $13 million alone from exercising stock options and selling the underlying shares. Altogether, he took home more than $16.6 million, including more than $2.6 million from his bonus.

With FleetBoston bracing for its merger with Bank of America later this year, the Boston-based money-center bank’s top executives also enjoyed big paydays. Chairman and CEO Charles Gifford, for example, received a $6 million bonus and nearly $3.8 million in restricted stock, neither of which he received the prior year. This came on top of his $992,000 salary, giving him a total package worth about $11 million.

FleetBoston’s president and chief operating officer, Eugene McGuade, received a $4 million bonus and more than $3.1 million in restricted stock. He also made more than $3.4 million from exercising stock options last year, giving him total compensation of about $11.5 million. No finance executives rank among the five highest compensated executives at the banking giant, however, according to its recently filed 10-K.

Such figures are a pittance compared to those earned by top executives at the major investment banking firms, however.

The top executives at Bear Stearns, for instance, enjoyed gargantuan gains.

Further, the Morgan Stanley chairman, Philip Purcell, received a $7 million bonus and another $4 million in stock awards. He also realized gains of $11.2 million from exercising stock options. Altogether, he took home more than $23 million last year.

Robert Scott, who retired as Morgan Stanley’s president and chief operating officer on November 30, received a $14.6 million bonus as part of his retirement agreement, and netted $4 million more by exercising stock options. His total package: more than $19.5 million. Scott will also receive consulting fees of $500,000 per year for five years, an annual cash bonus of $1 million per year for his first three years, and may receive a discretionary bonus in the remaining two years.

Meanwhile, Vikram Pandit, who became co-president and COO of Institutional Securities in November, earned about $24.5 million, including $13.5 million from exercising options and a $6.8 million bonus. Stephan Newhouse, the other co-president, received a package worth about $12 million, while Zoe Cruz, head of worldwide fixed income, foreign exchange, and commodities, received about $12.5 million.

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