Dive Brief:
- Citi cut CEO Michael Corbat's compensation 20.7% in 2020 to $19 million, the bank reported Friday in a Securities and Exchange Commission (SEC) filing.
- Bank of America slashed CEO Brian Moynihan's compensation, too — by 7.5% to $24.5 million, according to a Friday filing.
- They join Goldman Sachs CEO David Solomon and Wells Fargo CEO Charlie Scharf among chief executives at the nation's top six banks who have seen their 2020 pay packages reduced. JPMorgan Chase CEO Jamie Dimon's pay held steady at $31.5 million, while Morgan Stanley CEO James Gorman received a 22% increase to become the field's top earner at $33 million.
Dive Insight:
The reductions in compensation come after Corbat and Moynihan's pay held steady in 2019 at $24.5 million and $26.5 million, respectively.
Corbat's pay breaks down to a $1.5 million salary, a $5.3 million cash bonus and about $12.3 million in stock awards. The bank said it cut Corbat's incentive compensation "based on its assessment of his performance in respect of risk and control concerns that underlie Consent Orders that were entered into during 2020 between Citi and the Federal Reserve Board and the Office of the Comptroller of the Currency."
The latter fined Citi $400 million in October over persistent issues in risk management, data governance and internal controls, exemplified by a manually modified $900 million transaction the bank made last year to creditors of cosmetics firm Revlon. The bank's compensation committee likewise reduced compensation for other members of Citi's executive management team.
The Fed issued a cease-and-desist order giving Citi's board of directors until this month to submit a report detailing how it will hold senior management accountable for its woes with risk management, internal controls and data quality management, and how it will make executive compensation "consistent with risk management objectives."
Corbat is retiring at the end of this month, and leadership is passing to Jane Fraser, Citi's president and CEO of global consumer banking. The bank said it took that leadership transition into account — along with financial performance and the impact of COVID-19 — when considering Corbat's compensation level. Citi's net income fell 41% in 2020 compared with a year earlier, according to Friday's filing. Corbat's $19 million makes him the second-lowest-paid CEO among the U.S.'s six largest banks. Solomon's compensation was reduced to $17.5 million in 2020 after Goldman Sachs settled its long-running 1MDB scandal.
Moynihan's compensation package includes a $1.5 million salary and $23 million in restricted stock. Bank of America said it evaluated his compensation given COVID-19's "impact on financial performance, its clients, communities and its own employees."
The bank's net income dropped 35% in 2020, compared with 2019, but that still accounted for $18 billion. The bank committed to a no-pandemic-induced-layoff stance, raised the minimum wage of bank workers to $20 per hour, transitioned to remote-work capability for 85% of its employees, offered enhanced benefits including backup child care, and pledged $1 billion toward racial equity in the wake of the George Floyd protests, it said.
The bank, however, angered many of its high-earning investment bankers and traders when it looked to change the vesting policy attached to 2020 compensation. Bank of America reversed course for those employees but reportedly has left the change intact for others.
