Some of Wall Street’s biggest banks are actually setting aside more money for executive compensation now than before the meltdown. Spurred by improving profits, the top six U.S. banks, including those that received U.S. bailout funds, have set aside $74 billion to pay employees. That’s up from $60 billion in 2008, according to the Washington Post.
Goldman Sachs leads the pack, setting aside a record $6.6 billion for compensation in the most recent quarter. That brings their total compensation budget to $11.4 billion for the first half of the year. At that pace, an average Goldman employee will earn roughly $773,000, up from $700,000 in 2007.
The increase in compensation levels is sure to attract attention on Capital Hill, where some legislators have vowed to reign in executive compensation in the wake of the financial crisis.
But clearly the top banks feel they have to compensate their “rainmakers” well, or risk losing them to other banks or smaller firms. It should also come as no surprise that compensation stabilizes as market performance recovers.
A quick look at salaries for Managing Directors from various sources shows that compensation is holding up quite nicely versus 2007 levels. Base salary alone for a Managing Director with 5-10 years or more experience in that position ranges from $150,000 at the low end at boutique firms to $400,000 at major investment banks. Bonuses range from 100% to 250% of salary. So total compensation can range from a low of $300,000 to well over $1 million per year.
Next time, we’ll look at investment banking job compensation for vice presidents.