CEO Pay Mixed in Asset-Challenged Year

CEOs of the country’s largest asset managers, and megabanks with asset management divisions, are finding themselves in the hot seat over their high earnings relative to those of their employees.

The first wave of CEO pay ratio disclosures began last year, drawing scrutiny from Congress as the industry marked a decade since the 2008 financial crisis. Meanwhile, a Pensions & Investments analysis of proxy filings for 11 firms found that top executives received a mix bag as far as raises vs. pay cuts last year.

Overall, five CEOs saw their total compensation drop, while six received a bump in pay over 2017…

Alan Johnson, managing director and president of compensation specialist Johnson Associates Inc., New York, said he expects CEO pay to vary, with slightly more firms raising pay in 2018, despite the down fourth quarter. Asset managers will look at financial and investment results, as well as the company’s ability to attract new assets when assessing compensation, however, he added.

Pensions & Investments / April 29, 2019

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BlackRock CEO Laurence Fink Takes Pay Cut

Asset-management professionals will end 2019 with flat growth in bonus packages over 2018, according to a projection by compensation consultant Johnson Associates. Last year, asset-management professionals ended with bonus packages 3% to 4% higher than the previous year.

Wall Street Journal / April 12, 2019

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Wall Street’s Dirty Secret: Pay is Trending Down

“We don’t have the extreme levels of pay we saw 10 years ago,” said Alan Johnson, a Wall Street pay consultant. “The people making $10 million or $20 million a year aren’t there anymore.”

Wall Street pay may be about to soar even higher as the Trump administration takes an ax to some Obama-era regulations. The Volcker Rule was weakened last year, giving banks more leeway on trading, and the Consumer Financial Protection Bureau has been effectively neutered. More changes may be on the way.

“I would say we had 150% more regulation than optimal during Obama,” Johnson said. “Now we’re at 125%.”

Crain’s NY / April 2, 2019

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Active Managers Move Closer to Being Endangered Species

Unless active managers can differentiate themselves and their investment strategies, “like any industry that sells a lot of generic products, the active side of the industry will inevitably be smaller,” said Alan Johnson, managing director and president of compensation specialist Johnson Associates Inc., New York.

Pensions & Investments / April 1, 2019

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Managers Realizing That a New World Needs New People

“The investment industry is behind the times and resisting change,” said Alan Johnson, managing director and president of Johnson Associates Inc., New York, a money manager compensation consultant.

Mr. Johnson said the current “belt-tightening” the industry is undergoing will inevitably reduce the total headcount as managers rationalize and retrench their businesses by shedding “half-hearted” investment strategies, rethinking earlier geographic expansions and renewing their focus on better aligning compensation and incentives.

The result of cost-cutting measures likely will result in an overall 5% decline in money management compensation in 2019, according to Johnson Associates’ estimate.

Pensions & Investments / April 1, 2019

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“Kind of Inevitable” – Wells Fargo CEO Departs

Alan Johnson, founder of compensation consultancy Johnson Associates, calls Sloan’s announced departure “kind of inevitable.”

He says it is likely the board has been seeking replacements in recent months, and hopefully isn’t reacting only to Sloan’s testimony before Congress several weeks ago.

Johnson believes the most logical successor for Sloan will be an executive at a large bank with experience in the industry but who is perhaps a No. 5 or No. 6 in line elsewhere and likely not in line to become CEO at their current place of employment.

“They’re probably going to be compensated a lot,” Johnson adds, noting that it will likely be “at least” what Sloan was paid, since the incoming CEO of Wells Fargo will need “credibility” and “tough skin.” They will also likely be leaving a hefty amount of compensation behind.

He notes that an external search was the right decision for Wells Fargo. “You want to bring in someone who can legitimately say, ‘Hey, I just showed up.’”

Agenda / March 28, 2019

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