This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Wall Street Struggles With Executive Pay

Stocks in this article: C JPM BAC GS MS WFC AIG

NEW YORK ( TheStreet) -- Wall Street firms are finding it tough to set up compensation packages that are considered appropriate by the public and adequate to retain top talent.

The most high-profile pay packages, of course, are those of the CEO and other top earners that must be disclosed in regulatory filings.

But while top management may get raises or pay cuts or see more of their compensation weighted in stock, it's hard to get a read on what's going on with the rank and file employees.

For instance, Citigroup (C), like most other Wall Street banks, has been trending toward more bonus pay in stock, rather than cash, for traders and investment bankers. The shift has been gradual over the past few years and is based both on guidance from the Obama administration's so-called "pay czar" and a widespread belief that, in the past, banker incentives were not aligned closely enough with risk management and the broader health of the company.

But unlike reports suggesting that there is a consistent level of cash vs. stock for all employees, there is no broad mandate at Citi to pay traders and investment bankers the same way across the board. Some individuals may receive 65% of their pay in cash, while others might get a 50-50 cash-stock split, according to a source familiar with the matter.

"People have been getting paid more in stock, but not everyone is getting the same formula - it's just very different," said the source, who was not authorized to speak publicly on the matter.

Across Wall Street, the norm has moved more toward stock-based compensation over the past few years. The change began in 2009, when the Obama administration hired Kenneth Feinberg to oversee compensation practices at bailed-out companies. He was installed after public furor over bonuses at American International Group (AIG).

Feinberg had direct authority over the top paid employees at firms that still owed the government money and famously kept companies like Citi and AIG on a short leash. Citi lost one of its most profitable traders, Andrew Hall, divesting his commodities trading division because of his $100 million payout. AIG CEO Robert Benmosche battled with Feinberg over the restrictions, and ultimately the insurer's general counsel and her deputy left because they felt undercompensated.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs