Large financial institutions, Citi and BofA, face criticism from proxy advisers over their executive compensation plans.
In the world of finance, the topic of executive compensation has been a subject of much debate lately. This article will delve into the recent developments concerning the compensation packages of top executives at three major banks: Bank of America, Morgan Stanley, and Citigroup.
Let's start with Citigroup, where Vis Raghavan, the former executive from JPMorgan Chase, recently joined as CEO. Raghavan is set to receive deferred equity in six annual installments from 2026 to 2031, and his compensation for 2024 was disclosed to be $22.6 million, agreed upon prior to his hire. However, the proxy advisory firm Glass Lewis has criticized the $52.25 million in awards for Raghavan, prompting a recommendation that Citi's shareholders vote against the bank's compensation proposal.
Moving on to Bank of America, CEO Brian Moynihan's compensation for 2024 stands at $35 million, marking a 21% increase from the previous year. This significant raise was credited to Moynihan for leading the bank through a 2.3% increase in net income and a 3.4% jump in revenue. Despite this, Glass Lewis recommended that shareholders of Bank of America reject the bank's compensation proposal.
At Morgan Stanley, James Gorman received $27 million for 2024, despite stepping down as CEO at the end of 2023. This compensation was justified by the firm as a recognition of Gorman's role as a mentor, sounding board, and facilitator of CEO transition.
It's worth noting that other large U.S. banks that consolidate their CEO and chair roles pay at similar levels, but banks that separate the roles pay their chairs far less than the $27 million Morgan Stanley paid Gorman in 2024.
The debate over executive compensation has also extended to JPMorgan Chase, with CEO Jamie Dimon calling out the "undue influence" of ISS and Glass Lewis in his letter to shareholders last April. In 2022, these proxy advisory firms urged JPMorgan shareholders to reject a $52 million retention award for Dimon. Dimon, along with other CEOs, has been vocal about his disapproval of the advisory firms, with Dimon himself labelling them as "incompetent" in March 2023.
As for Glass Lewis's current stance on Citi's compensation proposal for Vis Raghavan, specific information is not readily available. However, it's important to note that the absence of direct information does not necessarily reflect a change in Glass Lewis's initial recommendation.
In conclusion, the issue of executive compensation at major banks continues to be a topic of contention. As shareholders and the general public, it's crucial to stay informed about these developments to ensure that executive compensation packages are fair and aligned with the banks' performance.
[1] Source: Various financial reports and news articles about Citigroup's business performance under Raghavan's leadership. [2] Source: General background materials on Citigroup. [3] Source: Unrelated legal and academic materials. [4] Source: Bank of America's financial reports and news articles detailing Moynihan's performance and compensation. [5] Source: Morgan Stanley's financial reports and news articles detailing Gorman's compensation and role within the company.
Personal-finance experts are scrutinizing the investment of resources in executive compensation packages at major banks, such as Citigroup and Bank of America. In light of the recent finance industry trend of investing in personal-finance education for employees, some argue that banks should also prioritize fair executive compensation to set a positive example and ensure transparency in business operations.
Despite Jamie Dimon's disapproval of proxy advisory firms like Glass Lewis, their critical stance on executive compensation packages has sparked discussions about the need for investing in responsible investing practices, aligning executive compensation with performance, and promoting personal-finance literacy among executives at major banks like JPMorgan Chase.
