NEW YORK (TheStreet) -- Big banks should consider breaking up, but top managers aren't incentivized to consider such a move as it would likely lead to lower compensation, argues KBW strategist Fred Cannon in a report published Sunday.

"There is little doubt that regulation has punished the shareholders of most large banks, reducing profitability, trapping capital and limiting returns," KBW's Cannon writes in his report. "This suggests that the large banks should consider accelerating the sale of parts of their businesses or breaking up."

However, Cannon found that the median annual pay of executives at the largest banks is more than two and a half times that of counterparts at regional lenders, creating a disincentive for managers to lobby for splitting up their institutions. Cannon found that top executives under the CEO at the biggest banks receive higher pay even that CEOs of smaller companies, suggesting they are better paid staying where they are even if they had a shot at running a smaller company spun out of the parent.

Pay at Goldman Sachs  (GS - Get Report) looks particularly excessive, judging from KBW's data (see table on the next page). Median executive compensation at Goldman Sachs is $59 million over the past four years, more than median executive pay at Discover Financial Services  (DFS - Get Report),Huntington Bancshares  (HBAN - Get Report), KeyCorp (KEY), Fifth Third Bancorp (FITB), Zions Bancorporation  (ZION), M&T Bank Corp. (MTB - Get Report), Capital One Financial Corp.  (COF - Get Report) and Regions Financial  (RF) combined.

Taking share price performance into account makes the pay disparity even more stark.

Shares of Goldman were flat from the start of 2010 through May 1 of this year and shares of all the others are up between 100-298% over the same time period. Goldman's median executive compensation is more than twice that of Citigroup  (C - Get Report) and more than three times that of Bank of America (BAC - Get Report)

An email message to Goldman spokesmen received no immediate response.

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