Over the last four quarters, big Wall Street banks have been more profitable than at any time since before the Great Recession, with the six largest banks making $63 billion. While some high-profile Wall Street firms say they’ll reduce their bonus pool, some bankers will still be pulling in seven-figure bonuses, and starting bonuses easily clear six-figures.
But one Wall Street executive is taking issue with sky-high pay. James Gorman, chairman and CEO of Morgan Stanley, told the Financial Times that compensation on Wall Street is “way too high,” chiding banks for increasing pay in good times and bad:
“There’s way too much capacity and compensation is way too high,” Mr Gorman said in an interview with the Financial Times. “As a shareholder I’m sort of sympathetic to the shareholder view that the industry is still overpaid.” [...]
“Comp [compensation] comes down because the amount of people in the business comes down,” said Mr Gorman. “What the Street has historically done is when revenues went up, they kept the comp-to-revenue ratio flat. They rank comp by ratio. When revenues went down, they increased the comp-to-revenue ratio because they said, ‘We might lose all our people. We have to increase it’. ”
He added: “That’s a classic Wall Street case of ‘Heads I win; tails, you lose’. The current Wall Street management is a little tougher-minded about that and shareholders are certainly tougher-minded.”
Over the last 30 years, skyrocketing Wall Street pay has contributed to the country’s increasing income inequality. And as one former Wall Street trader put it, “there’s no other industry where you could get paid so much for doing so little.” Pay for Wall Street CEOs jumped by double-digits last year according to multiple analyses.