CEO pay rose at most U.S. money managers and banks with asset management units, mirroring strong markets and increased asset levels at firms in 2019, an annual analysis of proxy filings by Pensions & Investments found.
Looking forward, however, pay is expected to drop to a level that is yet unclear but dependent in part on the outcome of U.S. elections, the pandemic’s impact on markets and company profitability, sources said.
An analysis of CEO pay at 11 firms showed that compensation increased at eight asset managers and banks. In 2018, CEO pay was a mixed bag, with compensation increasing at six firms and decreasing at five over the prior year.
Alan Johnson, managing director of New York-based compensation consultant Johnson Associates Inc., said increased CEO pay was “pretty rational” given the performance of firms last year.
Year-end pay for 2020, however, is “likely to be down significantly,” with senior executives apt to see pay decreases “at least as bad as everybody else,” Mr. Johnson said.
Only two firms P&I tracked failed to see stock price returns in the double digits (ranging from 15% to 47.3%) in 2019. Bank of New York Mellon Corp., New York, had a 9.5% stock return, and Franklin Resources Inc., San Mateo, Calif., saw a -9.3% return for 2019.
But so far in 2020, all firms reported negative stock price returns, most in the double digits, through May 14. Atlanta-based Invesco Ltd. saw the sharpest decline, with a -60.3% return for the period, followed by San Francisco-based Wells Fargo & Co., whose stock price returned -53.9%.
How hard CEO compensation will be hit is uncertain, however, as it will partially depend on an economic recovery in the wake of the coronavirus pandemic, he said.
2020 year-end bonuses for other investment professionals at traditional asset managers are expected to drop 20% to 25% from last year, according to projections in a May 13 Johnson Associates compensation report.