Street's Top Dogs Get Top Dollar
In a year when stocks of U.S. brokerage companies sported mostly modest gains and in one case a big decline, chief executive officers at four of the largest brokerage houses pulled in $110.1 million among them, a sharp rise from a year ago.
The four major firms that have released details on CEO pay so far -- Merrill Lynch & Co., Morgan Stanley, Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc. -- gave top dogs an average raise of 33%, while those firms' stocks rose an average of 4.7%. Total compensation, including salary and a variety of cash and stock-related bonuses, totaled $32 million for Merrill's Stan O'Neal, $22 million for Morgan Stanley's Phil Purcell, $29.8 million for Henry Paulson Jr. of Goldman, and $26.3 million for Richard Fuld of Lehman.
Morgan Stanley played a big role in pulling down the stock average -- its shares fell 8.2% in its fiscal year ended Nov. 30, while its chief, Mr. Purcell, got a 47% raise from the previous year's pay, which Morgan puts at $15 million, after adjusting for options that were offered in 2003 but not 2004.
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Still, even in the case of stronger performers such as Lehman, pay rose by a far higher percentage than stock returns. Lehman stock rose 16% in the company's fiscal year ended Nov. 30, compared with the S&P 500's return of 11% over the same period. Mr. Fuld received a 33% raise.
Rewards may be even sweeter for another major firm's CEO, Bear Stearns Cos.' James E. Cayne, whose pay comes out in late February. Mr. Cayne historically has been one of the highest-paid leaders on Wall Street and collected $39.3 million last year in both cash and assorted stock awards. This year, his fortunes are more likely than peers to mirror that of Bear investors. Bear had a hard-to-beat double whammy in fiscal 2004: a 35% stock-price jump and a 14.6% increase in earnings per share. Late yesterday, Bear disclosed one portion of his pay, a long-term stock award valued as of yesterday at $7.7 million based on previous years' results in addition to 2004's.
The big paydays are a reminder that on Wall Street, stock performance is secondary when it comes to executive pay. Historically, securities-firm chiefs get a cut of last year's profits, keeping salaries relatively small and doling out big year-end bonuses based on financial results, as opposed to just share performance.
Still, the sheer size of the 2004 raises reflects an arms race among Wall Street chiefs. Morgan and Merrill raised their leaders' pay after benchmarking it to securities-firm peers. Goldman's board said it examined CEO pay at certain "Fortune 50" companies before setting its leader's compensation. This benchmarking has helped push pay back to the record levels set during the technology boom, even though only some of the firms are approaching the stock price, profit and revenue they enjoyed in 1999 and 2000.
Meanwhile, Credit Suisse First Boston, the securities unit of Credit Suisse Group, doesn't disclose pay of the CSFB chief executive. The Swiss parent discloses total compensation paid collectively to members of executive management and the board of the Swiss parent, and the pay of the highest-paid director. For the 2003 fiscal year, the senior executives, called the Group Executive Board, received a total of 172.7 million Swiss francs (valued then at $127.9 million), nearly a third of that retention awards that require meeting certain future performance covenants. The 2004 pay isn't out yet.
Brokerage firms point out that profits were much better last year than stock prices reflected, and in the case of Bear, Lehman, Merrill Lynch and Goldman, they hit record levels. Guy Moszkowski , a brokerage-industry research analyst at Merrill, points out that hard-to-control forces such as electoral and wartime uncertainty, as well as a disappointing early start to the year in both underwriting and deal making "caused the stocks of many of these firms not to do as well as their underlying performance actually warranted."
Another difference this year is the form of pay. In lieu of stock options, controversial both because of how they are expensed and awarded, boards increasingly are giving out large grants of so-called restricted company stock. Firms say restricted stock aligns CEOs' interests with shareholders because the stock can fluctuate, unlike cash, and they have an incentive to keep the stock price up over an extended period of time. Boards usually restrict their sale until a later date.
The investment office of the American Federation of Labor and Congress of Industrial Organizations and affiliated union pension funds have placed shareholder proposals before a number of U.S. corporations, including some financial firms, urging the use of performance targets as a condition to selling restricted stock, rather than just setting time periods.
Earlier this month, the Morgan Stanley board defended Mr. Purcell's $22 million payday by saying that his previous three years' pay -- an aggregate of $48.7 million -- "ranked last against Morgan Stanley's Key Competitors." The board added that the company's pretax profit and return on shareholder equity over that time "ranked above the median" among several peers.
The compensation-committee report didn't discuss Morgan's stock decline. Instead, the board set Mr. Purcell's 2004 compensation as a floor for calculating pay increases. The board said it would tie raises to the 2004 number and an increase or decrease in pretax earnings.
Morgan says its compensation committee focuses on the drivers of stock price rather than simply the stock price. Not only did pretax profit rise 15%, but Morgan's stock also is up 18% since the start of the new fiscal year, while the S&P 500-stock index is up 3.09%.
Late last month, Merrill's Mr. O'Neal saw his salary increased to $700,000 -- back to the level of his predecessor, David Komansky. A restricted-stock bonus of $31.3 million brought his 2004 compensation to $32 million.
A top factor was Merrill's highest-ever annual earnings of $4.4 billion, announced in January. Merrill shareholders, however, aren't sharing in as much of that upside. Merrill's stock rose 1.9% during 2004.
A Merrill spokesman says the board considered a variety of options for structuring compensation and concluded that awarding Mr. O'Neal's bonus entirely in restricted stock, which doesn't vest until 2009, was the most appropriate.
For Mr. Paulson, Goldman also posted its highest-ever annual earnings -- $4.55 billion. Goldman's stock, however, rose just 9.1% during the company's fiscal year, which ended in November.
Along with benchmarking Mr. Paulson's pay against other top executives, Goldman said his 39% pay increase, mostly in the form of an all-stock bonus, was merited by his "exceptional" performance. A spokesman declined to comment further on the pay.
华尔街大腕领到大红包
过去一年，美国证券经纪公司的股票大多只有小幅上涨，个别股票还大幅下跌。但华尔街四大券商的首席执行长合计却有1.101亿美元的进帐，较前一年大有长进。
已公布相关数据的四大券商──美林(Merrill Lynch)、摩根士丹利(Morgan Stanley)、高盛(Goldman Sachs)和雷曼兄弟(Lehman Brothers)──去年付给首席执行长的薪酬平均涨幅为33%，而它们平均股价涨幅只有4.7%。
四个人中，美林的奥尼尔(Stan O'Neal)共获得3,200万美元的总薪酬，其中包括薪水和各类现金及股票奖励；摩根士丹利的帕塞尔(Phil Purcell)获得2,200万美元；高盛的帕尔森(Henry Paulson Jr.)和雷曼兄弟的福尔德(Richard Fuld)分别获得2,980万美元和2,630万美元。
在4家公司的股票中，摩根士丹利的股价表现最差，在截至11月30日的上一财政年度，该股下跌了8.2%。但帕塞尔先生去年的薪酬在对期权等项目进行调整后却比上年的1,500万美元劲增47%。
不过，即使是股价表现良好的雷曼兄弟，其首席执行长的薪酬升幅也远高于股价涨幅。雷曼兄弟股价在截至11月30日的财政年度中上涨了16%，同期标普500指数的涨幅是11%。而福尔德的薪酬增加了33%。
另一家大券商──贝尔斯登(Bear Stearns Cos.)的首席执行长凯恩(James E. Cayne)获得的进项可能更丰厚。具体数字将在2月底公布。凯恩历来就是华尔街上收入最高的人士之一，上年，他获得的现金和各类股票奖励合计价值3,930万美元。
与同行相比，凯恩的财气更能反映公司股票投资者的运气。2004财政年度，贝尔斯登的双重好运简直无人企及：其股价上涨了35%，每股收益增长14.6%。贝尔斯登周三晚间透露，除2004年的股票奖励之外，根据上年的业绩发给凯恩的长期股票奖励截至周三价值为770万美元。
华尔街大腕们天文数字般的薪酬再次提醒人们，在华尔街，公司股票的表现在决定高层管理人士薪酬时只是次要因素。华尔街的传统做法是，证券公司的老总们会根据公司去年的利润获得报酬，薪水只是收入中比例相对较小的一块，他们会根据公司的财务业绩拿到大笔年终奖，而不是只看公司股票的表现。
不过，从2004年薪酬上升的绝对幅度来看，华尔街老总们似乎在进行一场“军备竞赛”。摩根士丹利和美林是在考察了业内同行公司的总体水平后确定公司高层的薪酬标准的。
高盛董事会说，在确定本公司管理层的薪酬标准前，他们参考了“财富50强”(Fortune 50)公司的相关情况。这种做法使高层管理人士的薪酬重新回到互联网鼎盛期的创纪录水平，虽然只有少数公司的股价、利润和收入水平能与当年相媲美。
瑞士信贷集团(Credit Suisse Group)旗下的证券经纪子公司瑞士信贷第一波士顿(Credit Suisse First Boston)不打算公布首席执行长的薪酬。不过瑞士信贷集团会公布管理层成员和集团董事会成员的薪酬总额，以及薪酬最高的董事的收入。2003财政年度，由高级管理人士组成的集团管理委员会(Group Executive Board)成员总计获得1.727亿瑞士法郎的薪酬，合1.279亿美元。2004年的数字尚未公布。
经纪公司指出，去年的利润表现比股价走势好得多。贝尔斯登、雷曼兄弟、美林和高盛就更是如此──这些公司的利润都创出了历史纪录。美林经纪业研究分析师莫什科夫斯基(Guy Moszkowski)指出，大选和战争的不确定性等难以控制的力量，以及当年承销和交易情况开局不利使得许多机构的股票表现不如实际的业绩表现。
去年的另一个不同是工资的构成。董事会越来越多地给予所谓的限制性公司股票，以此来替代颇有争议的股票期权。这些机构称，限制性股票使得首席执行长的利益与股东保持一致，因为与现金不同，这类股票会有涨跌波动，因为他们需要在相当长的时间内保持股价处于高位。董事会通常会限制此类股票在较短的期限内出售。
美国劳工联盟及产业工会联合会(The American Federation of Labor and Congress of Industrial Organizations, AFL-CIO)及附属工会退休基金的投资办公室向包括部分金融机构在内的众多企业递交了股东提案，敦促采用绩效目标作为出售限制性股票的条件，而不是仅仅设定时间期限。
本月初，摩根士丹利董事会对帕塞尔2,200万美元的薪资进行辩护，称他过去3年的工资（总计4,870万美元）在摩根士丹利的主要竞争对手中排名最后。董事会还称，其间该公司的税前利润和股权回报率在几个竞争对手中排名高于中值。
摩根士丹利补偿委员会的报告并未讨论其股价的下跌。董事会还表示，帕塞尔2004年的薪资是计算薪资增长的基础。董事会称，将把薪资的增长同2004年的数据和税前收益的增减联系起来。
摩根士丹利称，其补偿委员会更关心股价的推动力，而不是单纯的股价。自新财年以来，不但其税前利润增长了15%，其股价也上涨了18%，而同期标准普尔500指数仅上涨了3.09%。
上月末，美林的奥尼尔发现他的工资增加到70万美元，达到了其前任科曼斯基(David Komansky)的水平。3,130万美元的限制性股票奖励使其2004年的收入达到了3,200万美元。
其中最重要的一个因素是1月份宣布的美林年收益达到创纪录的44亿美元。但美林的股东并未从中分享到多少喜悦，美林股票2004年仅上涨了1.9%。
美林的发言人称，董事会考虑了作为薪资收入的各种期权方案，最终认为全部以限制性股票的方式奖励奥尼尔是最适当的。这部分股票只有到2009年才能出售。
对帕尔森而言，高盛也公布了有史以来最高的年度收益：45.5亿美元。但其股价在截至11月份的上财政年度仅上涨了9.1%。
高盛称，将帕尔森的薪资同其他高级管理人员相比，39%的薪资涨幅是与其优异的表现相一致的。帕尔森薪资的上涨主要是纯股票形式的奖励。该公司发言人对此没有进一步置评。
