NEW YORK–Ten years after the crash of many of the biggest Wall Street Banks and the onset of the Great Recession, many employees of those banks have seen billions of dollars in payouts, while others have seen almost nothing at all.
Employees of Goldman Sachs, Wells Fargo and JPMorgan Chase have received approximately $12.5 billion from stock options exercised in the decade since the collapse of Lehman Brothers set off the widespread collapse of some of America’s largest financial institutions, according to Bloomberg.
But at Morgan Stanley, Bank of America and Citigroup, millions of options were canceled or expired as worthless amid fallout from the economic disaster, Bloomberg added.
“Some benefited and some didn’t – that’s the point of performance-based compensation,” Fabrizio Ferri, an associate professor of accounting at the University of Miami, told Bloomberg. “The skeptic will say it wasn’t so much the performance of people, but factors outside their control, and they benefited from being at the right today,” reported Bloomberg, which added most of those firms are less profitable than they were in the run-up to the 2008 crash, partly as a result of more stringent regulation. “Investors scrutinized compensation programs, blamed for fueling excessive risk-taking, and pushed boards to rein in pay while tying it more strongly to performance,” Bloomberg added. “Still, bank employees in general are doing just fine. While some were forced to adjust their standard of living, financial services jobs remain among the best-paying in corporate America. Last year’s bonus pool for workers at U.S. banks was the largest since 2007, according to a survey by law firm Linklaters. And some option awards granted during the crisis, meant to persuade workers to ride out the storm, have paid off handsomely in the long run.”
Gold for Goldman
Goldman Sachs is one such example. In December 2008, the bank awarded about 36 million options and 20.6 million restricted shares to persuade top employees and some directors to stick around, according to Bloomberg. The options, with a $78.78 strike price, have generated almost $3 billion in pretax gains for workers, according to data compiled from regulatory filings reviewed by Bloomberg. Shares of Goldman have almost tripled since, closing at $230.21 earlier this week.
In total, employees at Goldman Sachs have reaped $4.9 billion from options exercised over the past decade, the report added.
On the other hand, shares of BofA, Morgan Stanley and Citigroup so far have failed to join their largest peers in piercing their pre-crisis records, Bloomberg said.