For most investors, 2018 was brutal—with the U.S. stock market hitting a record high mid-year and then quickly diving into its worst-ever losing streak in the final weeks of December. But that didn’t prevent Wall Street’s top money managers from getting decent pay raises despite their investors’ woeful losses.
Last year, CEOs of the country’s largest banking and financial institutions received a median pay raise of 8.5 percent, while their firms recorded a 17 percent loss on investors’ accounts, a new executive compensation analysis by The Wall Street Journal has found.
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Examining CEO pay data at S&P 500 companies, the Journal found that top executives in the finance sector received larger raises than their counterparts in other industries, which averaged 5.6 percent in 2018.
Meanwhile, the average wage increase for all working Americans for the year was estimated at around three percent, according to Mercer’s 2018-2019 U.S. Compensation Planning Survey.
Financial institutions make up about one-fifth of S&P 500 companies. Notable firms on the list include JPMorgan Chase, Goldman Sachs, Berkshire Hathaway and other household names.
To lead the compensation race, Richard Handler, CEO of Jefferies Financial Group, a relatively small asset management firm, received $44.7 million in total compensation in 2018—a 105 percent raise from the previous year—while the firm delivered a negative return of 14.9 percent in 2018. About 60 percent of Handler’s pay was performance-based equity awards scheduled for the future.
Handler’s equivalent at JPMorgan Chase, the largest bank in the U.S., Jamie Dimon, received a total pay package of $31 million ($29 million of which was performance-based bonuses), a five percent raise from 2017. JPMorgan’s stock fell 6.7 percent in 2018, although the bank reported record net income of $32.5 billion and a 17 percent return on tangible common equity.
On the other end of the spectrum, BlackRock CEO Larry Fink took a 4.3 percent pay cut in 2018 after the company stock fell 37 percent during the year. And Berkshire Hathaway’s CEO Warren Buffett received a salary of only $389,000 last year, the lowest among Wall Street CEOs. Buffett didn’t receive additional bonuses or equity awards.
Berkshire Hathaway returned three percent for investors in 2018.
Overall, finance CEOs of S&P 500 companies received a median pay of $11.4 million last year, $1 million below the median pay across all S&P 500 chief executives.