Alan Johnson, managing director of pay consulting firm Johnson Associates in New York, said the big gains for the leaders of American Express, Goldman Sachs and JPMorgan reflect how stock option compensation can magnify gains in a company’s share price.
“When the stock goes up, with options, you get more leverage,” he said.
“I wish more companies would adopt the way [Exxon] pay[s] their executives, where you don’t get it when you leave, you’ve got to earn it, [and] you get [it] delivered over time,” says Alan Johnson, president and founder of compensation consulting boutique Johnson Associates.
“In 2017, banks will start to rebound – with some of the onerous regulations rolled back, maybe the banks will start to do better, which would be good for everybody,” he said. “A leading indicator of that is their stocks have done particularly well since the election, meaning the markets believe that this will be a positive change for the banks.
Wall Street Journal
“If you listen to politicians, you’d think bankers are still making money like it’s 2007. They’re not,” said Alan Johnson, who runs the firm and helps banks design compensation programs. “You can make this kind of money working at PepsiCo, and life at PepsiCo is lot more pleasant.”
“All signs are pointing to a disappointing end to an overall lackluster year on Wall Street,” said Alan Johnson, managing director of Johnson Associates, which conducted the study.
New York Times
Alan Johnson, the founder of Johnson Associates, describes this pattern as a “malaise,” and one that is unlikely to reverse itself anytime soon.
“I don’t see it changing for the next year or two, either,” he said in a phone interview. “The pressures in the industry on profit and fees are going to continue, and I think pay will likely continue to decline in 2017.”
The bank risks angering staff if it abandons cash incentives entirely, said Alan Johnson, founder of New York-based compensation consultancy Johnson Associates Inc. If the board proceeds, it should at least pay cash bonuses to junior staff and structure something creatively for senior bankers that could dramatically increase in value if the bank recovers.
“Compensation is going to be a much more political process going forward. You’re going to based not only on your merits but what is politically attractive at the moment,” said Alan Johnson, managing director of compensation consulting firm Johnson Associates.
“Most [asset management] sales today involve lots of people – it’s not the stereotype of an individual salesman going around picking up orders,” said Alan Johnson, the founder and managing director of Johnson Associates. “With most fund firms now having a distribution strategy across multiple channels, it requires a more nuanced comp system, more of a hybrid – that’s where the world is going, and it’s the kind of thing you’ve got to get right.”
Compensation plans are, nevertheless, meant to modify behavior, and UBS may be trying to send brokers who still like transactions another message with its new plan, according to pay consultants.
“They probably figure that the transformation to fee-based has stabilized and that they need to keep high-producing brokers in place,” said Johnson Associates founder Alan Johnson.