Sometimes, it really pays to be a banker. For example, JPMorgan Chase & Co. (NYSE:JPM) Chairman and CEO Jamie Dimon was granted a 74 percent raise in 2013, receiving $20 million between stock grants and a base salary of about $2 million. The decision to give Dimon a raise came despite the bank posting its first-ever quarterly loss that year.
Still, JPMorgan stock increased about 30 percent in 2013, and Dimon played a critical role in steering the bank through the mess of legal trouble it found itself in after the wake of the financial crisis and the London Whale fiasco. The firm’s board of directors ultimately decided it was appropriate to reward Dimon for his work despite the bad signals it may send to the public.
Bank of America Corp. (NYSE:BAC) reached a similar conclusion about its chief executive, Brian Moynihan, although Moynihan arguably has fewer ties to the crisis than Dimon. According to a document filed with the Securities and Exchange Commission on Wednesday, Moynihan received $12.5 million in stock grants as compensation in 2013, which is in addition to his $1.5 million salary. This compares against compensation of $12.1 million in 2012.
Whatever your opinion of Bank of America, Moynihan has steered the company well over the past few years, and the raise isn’t totally out of line with the kind of lavish pay packages usually granted to top Wall Street executives. Case in point: Dimon’s enormous raise.
Like Dimon did for JPMorgan, Moynihan has mopped up much of the mess that his bank made during the financial crisis, when it was led by then-CEO Kenneth Lewis and then-CFO Joe Price. Both Lewis and Price could be the targets of judgements by the New York attorney general’s office for their actions in the build-up to the financial crisis. Meanwhile, Moynihan has helped steer the bank away from additional damages related to its purchase of Merrill Lynch in 2009, something that was a real danger until recently.
Bank of America stock is up more than 37 percent over the past year and more than 99 percent over the past two years, performance that probably played a role in the board’s decision to give Moynihan a raise. The bank also reported strong fourth-quarter and full-year results in 2013. Total revenue excluding accounting adjustments climbed 13.8 percent to $22.3 billion for the three months ended December 31, beating the mean analyst estimate of $21.24 billion, while net income jumped 369 percent to $3.4 billion for the same period. Earnings jumped from 3 cents to 29 cents per share, beating the mean analyst estimate of 26 cents per share.
For the year, total revenue (also excluding accounting adjustments) fell about 1 percent to $91 billion, beating the mean analyst estimate of $89 billion. Earnings increased 260 percent to 90 cents per common share, beating the mean analyst estimate of 88 cents per share.