The 'Heads I Win, Tails You Lose' Bonus Report

[Andy Nguyen]

New York State Attorney General Andrew Cuomo has released his report on bank bonus culture, which is he dramatically titles 'No Rhyme Or Reason - 'Heads I Win, Tails You Lose''. The contents will no doubt shock everyone, except those who work in the financial markets.
Cuomo's office reviewed historic and current bonus data for the nine firms selected for TARP support last year (isn't 'too big to fail' sooooo 2008!), and here are some of his comments / findings.

But first, Cuomo's predictable conclusion:

'When the banks did well, their employees were paid well. When the banks did poorly, their employees were paid well. And when the banks did very poorly, they were bailed out by taxpayers and their employees were still paid well'.

The report found that:

1. Two firms, Citigroup and Merrill Lynch, together lost $54bn in 2008, paid out nearly $9bn in bonuses, and received TARP bailouts totalling $55bn.

2. Goldman Sachs, JPMorgan Chase and Morgan Stanley made 2008 bonus payments which were 'substantially' greater than their net income.

3. Bank of New York and State Street paid out bonuses in line with what you would expect in a tough year like 2008 (Ed's note - don't these firms always pay out bonuses as if the year has been a tough one ?)

4. Bank of America's compensation and benefits payments increased from $10bn to $18bn between 2003 and 2008, yet 2008 net income fell from $14bn to $4bn.

5. Citigroup's 2007 compensation hit over $30bn in 2007, even though the firm was facing 'a significant financial crisis'.

6. Merrill Lynch paid out close to $16bn in compensation and benefits payments in 2007, while losing more than $7bn. The firm paid out close to $15bn in 2008, while facing near collapse.

Here are some interesting stats about the 9 firms' 2008 performance / bonuses:

2008 Earnings

JPMorgan Chase - $5.6bn profit

Bank of America - $4bn profit

Goldman Sachs - $2.322bn profit

State Street - $1.811bn profit

Goldman Sachs - $1.707bn profit

Bank of New York Mellon - $1.4bn profit

Merrill Lynch - $27.6bn loss

Citi - $27.7bn loss

Wells Fargo / Wachovia - $42.933bn loss

2008 Bonus Pool

JPMorgan Chase - $8.693bn

Citi - $5.33bn

Goldman Sachs - $4.823bn

Morgan Stanley - $4.475bn

Merrill Lynch - $3.6bn

Bank of America - $3.3bn

Wells Fargo / Wachovia - $977.5m

Bank of New York Mellon - $945m

State Street - $470m

2008 - Number of Employees Receiving Over $1m

JPMorgan Chase - 1,626

Goldman Sachs - 953

Citi - 738

Merrill Lynch - 696

Morgan Stanley - 428

Bank of America - 172

Bank of New York Mellon - 74

Wells Fargo / Wachovia - 62

State Street - 44

2008 Big Bonus Bankers

Bank of America - 8 individuals received bonuses of $8m or more

Bank of New York Mellon - 22 individuals received bonuses of $2m or more

Citi - the top 124 bonus recipients received a combined $609.1m

Goldman Sachs - the top 200 bonus recipients received a combined $994.9m

JPMorgan Chase - the top 200 bonus recipients received a combined $1.119bn

Merrill Lynch - the top 149 bonus recipients received a combined $858m

Morgan Stanley - the top 101 bonus recipients received a combined $577m

State Street - 8 individuals received bonuses of $2m or more

Wells Fargo / Wachovia - 22 individuals received bonuses of $2m or more

2008 Compenation & Benefits As A % of Net Income

Morgan Stanley - 720.91%

Goldman Sachs - 470.89%

Wells Fargo (excluding Wachovia) - 487.38%

Bank of America - 458.36%

JPMorgan Chase - 405.81%

Bank of New York - 369.05%

State Street - 212.15%

Citi - N/A (loss making)

Merrill Lynch - N/A (loss making)

2008 TARP Support

Bank of America - $45bn (note - around $25bn of this support was required because of the Merrill acquisition)

Citi - $45bn

JPMorgan Chase - $25bn

Wells Fargo / Wachovia - $25bn

Goldman Sachs - $10bn

Merrill Lynch - $10bn

Morgan Stanley - $10bn

Bank of New York Mellon - $3bn

State Street - $2bn

The 'Heads I Win, Tails You Lose' Bonus Report :: Business News :: Here Is The City News

 

[Uncle Max]

Every newspaper and website has these stats today

 

[Andy Nguyen]

For good reasons.
People always want to know what their coworkers/neighbors make and these are just too good to pass over by the media.
Add in the TARP story in the background and you have some breaking headlines.

 

[Dave Haan]

Epicurean Dealmaker's take

 

[Uncle Max]

I like when they say in newspapers that every employee of company XYZ gets $700,000 bonus. Do they really think that bonus pool equally divided among all employees?