JP MORGAN Chase plans to keep overall compensation per employee roughly flat this year from last year, lagging gains at rivals, as the bank’s massive legal settlements weigh on its results, two sources familiar with the matter said yesterday.
Bonuses were largely set early this week, though payouts could change in unusual situations or if there is an unexpected change in the company’s results during the last six weeks of the year, said the sources, who spoke on the condition of anonymity. It is not yet clear what chief executive Jamie Dimon’s bonus for 2013 will be.
Pay increases have been muted across much of the banking sector in the aftermath of the financial crisis, but JP Morgan’s plans are on the low end of what experts forecast for the industry this year.
But JP Morgan has higher legal expenses than rivals. On Tuesday, the bank agreed to pay $13bn to the US government to settle charges it misrepresented the quality of mortgages it sold to investors before the housing crisis. After taxes, that settlement is equal to nearly half of what the bank can earn in a year.
Without legal settlements, JP Morgan’s profit would have been about 27 per cent higher in the first three quarters than the same period last year, an increase that would have made it easier for the company to boost pay per employee this year.
City A.M. Reporter