These 10 wealth managers paid their CEOs an average of $27M in 2021

April 19, 2022 6:00 PM

Stronger wealth management earnings than in 2020 yielded higher compensation last year for the CEOs of 10 of the largest firms in the industry.

J.P. Morgan Chase CEO Jamie Dimon led the field with ease by tens of millions of dollars after the impact of a huge “one-time special award” and the continued growth of the firm’s wealth management arms, according to Financial Planning’s analysis of the companies’ 2022 proxy statements. Firms like it and rivals such as Bank of America’s Merrill, Morgan Stanley, Wells Fargo, LPL Financial, Raymond James and Ameriprise set pay with an eye toward aligning their compensation with the firm’s results.

“The way that we as compensation consultants and our clients typically look at executive pay, we want to ensure that we are paying competitively for the CEO position to ensure that the organization is meeting its business goals and thereby driving shareholder value creation,” said Ed Steinhoff, a managing director with Pearl Meyer who works with several banks and insurance companies. “All of that has driven a very competitive market for talent.”

In many cases, companies “recalibrated to adjust” their executive compensation in 2021 after the coronavirus wiped out a lot of their earnings a year earlier, according to Eric Labourdette, a principal at ClearBridge Compensation Group.

“What happened in 2021 was still somewhat reflective of COVID times,” Labourdette said. “You did see a bounceback in terms of that performance and in terms of that compensation program in 2021 recognizing that so many companies had been hurt in 2020.”

Base CEO salaries rose about 3% last year, with larger increases under incentive pay provisions of the executives’ compensation agreements, according to Steinhoff.

“We definitely have seen higher incentive pay for 2021 performance than we did for 2020 performance,” Steinhoff said. “In 2021, we saw a pretty nice recovery of financial and operational results as organizations figured out how to work through the pandemic, and so we saw much stronger results in 2021 than we did in 2020.”

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Note: Each of the firms shared executive pay in their 2022 proxy statements or 2021 annual reports. Total compensation in standardized tables required by the SEC for a company’s named executive officers may vary from a firm’s “direct compensation” to its CEO or other measures disclosed in annual documents. The calculations depend on the current value of stock units, the timing of vesting or exercising of options and other factors. For example, one firm below disclosed lower total compensation for a CEO in 2021 but listed a higher amount in direct pay.

To see a list of 10 bank CEOs who reeled in big raises for 2021, click here. To see how 10 of the largest wealth managers paid their top executives and what they disclosed to shareholders about the CEO’s pay package last year, scroll down our slideshow.

UBS

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CEO: Ralph Hamers

2021 total compensation: $12,562,444

2020 total compensation for former CEO Sergio Ermotti: $14,053,570*

Remark: “The [board] recognized that Ralph Hamers successfully focused on building on UBS’s strong business momentum, which resulted in very strong financial results for 2021,” according to the firm’s annual report. “He led the group toward stronger client centricity and improved the delivery of the bank’s ecosystem to clients. He also delivered a successful strategic refresh in 2021 and re-positioned the bank’s sustainability efforts.”

*2020 compensation is an estimated conversion from Swiss Francs to U.S. dollars. As a foreign company, the wirehouse’s parent doesn’t file annual proxy statements with the SEC that include the same information available about other publicly traded firms.

LPL Financial

CEO: Dan Arnold
2021 total compensation: $12,875,868
2020: $7,256,713
2019: $7,669,954
2021 vs. 2020: $5,619,155 (77%)

Other notable executive compensation: Division President of Business Development Richard Steinmeier ($3,597,104)

Median annual total compensation of all employees (other than CEO): $88,009
CEO pay ratio: 146:1

Remark: “The Compensation Committee determined that the company’s financial performance for 2021 exceeded target goals and the 2021 [objectives and key results] were collectively achieved at target goals,” according to the firm’s proxy statement. “As a result, the 2021 bonus pool was funded above target level and the annual cash bonus awards to our [named executive officers] (as well as to our other executive officers and employees) were generally paid at target level, or above target level for high performing employees, including our [named executive officers]. This approach is consistent with our compensation philosophy and past practice.”

Raymond James

CEO: Paul Reilly
2021 total compensation: $13,901,046
2020: $12,449,359
2019: $13,090,394
2021 vs. 2020: $1,451,687 (10%)

Median of annual total compensation of all employees (other than the CEO): $106,782
CEO pay ratio: 130:1

Remark: “By remaining focused on our client-first strategy of providing outstanding service to our financial advisors and their clients, the firm generated record results and successfully executed several strategic initiatives during the year,” according to the firm’s proxy statement. “In the Private Client Group segment, fiscal 2021 was a strong year for client asset growth, retention of advisors and financial advisor recruiting. In the Capital Markets segment, we achieved record investment banking and brokerage revenues and continued to make investments, including niche acquisitions, to expand and strengthen our platforms. The Asset Management segment continued to benefit from increased utilization of fee-based accounts by our Private Client Group clients. Raymond James Bank faced challenges due to the decline in short-term interest rates but generated strong loan growth and benefited from an improved credit environment.”

Ameriprise

CEO: Jim Cracchiolo
2021 total compensation: $21,229,464
2020: $20,794,703
2019: $24,533,883
2021 vs. 2020: $434,761 (2%)

Other notable executive compensation: President of Advice & Wealth Management Products and Service Delivery Joseph Sweeney ($5,005,525)

Median employee’s annual total compensation: $129,010
CEO pay ratio: 165:1

Remark: “The committee considered a number of factors when setting targets for the year, including the Company’s near and long-term strategic plans and objectives, the external market environment (equity markets, interest rates, volatility, etc.) and prior year performance levels,” according to the firm’s proxy statement. “Ameriprise results reflect strong core business performance and organic growth. Financial results for the full year exceeded our planned expectations. Primary drivers of our performance included robust client and advisor activity levels in Advice & Wealth Management leading to record levels of client net flows and improved transactional-based fees as well as positive net flows in Asset Management as a result of good fund performance and strong gross sales. In addition, improved sales in Retirement & Protection Solutions, along with continued mix-shift into variable universal life and non-living benefit products, helped to reduce our risk exposure.”

Wells Fargo

CEO: Charlie Scharf
2021 total compensation: $21,350,906
2020: $20,392,046
2019: $34,286,574
2021 vs. 2020: $958,860 (5%)

Median employee estimated annual total compensation: $73,578
CEO pay ratio: 290:1

Remark: “Our executive compensation program is designed to incentivize our executive officers to drive strong business results and deliver long-term shareholder value,” according to the firm’s proxy statement. “During 2021, our continued focus on efficiency improvements and our ongoing work to put legacy issues behind us contributed to significantly improved year-over-year financial results. We continued to execute on our strategic priorities, including making significant progress on our risk, regulatory and control work, advancing our DE&I efforts, and continuing to support and invest in our customers, communities and employees. While we are pleased with our progress, we recognize there is still work to be done.”

Charles Schwab

CEO: Walt Bettinger
2021 total compensation: $21,938,404
2020: $15,959,193
2019: $16,101,141
2021 vs. 2020: $5,979,211 (37%)

Other notable executive compensation: Chairman Charles Schwab ($7,826,623)

Annual total compensation of a median employee: $109,269
CEO pay ratio: 201:1

Remark: The company’s ‘Through Clients’ Eyes’ strategy is based on the principle that developing trusted relationships will translate into more assets from new and existing clients, ultimately driving more revenue and, along with expense discipline, generating earnings growth and building long-term stockholder value,” according to the firm’s proxy statement. “The Compensation Committee’s decisions for 2021 aligned with this disciplined focus on financial results.”

Edward Jones

CEO: Penny Pennington
2021 total compensation: $22,567,837
2020: $18,014,658
2019: $14,674,106
2021 vs. 2020: $4,553,179 (25%)

Median annual total compensation of all employees, excluding the CEO: $84,492
CEO pay ratio: 267:1

Remark: “The partnership’s compensation program allocates profits to general partners, including members of its [executive leadership team], primarily based upon their ownership interests in the partnership,” according to the firm’s annual report. “As general partners, ELT members benefit annually from the profits of the partnership through current cash payments from short-term results and from having an opportunity to continue to share in the long-term profitability of the organization. By owning general partnership interests, ELT members are encouraged to balance short-term and long-term results of the partnership as they have a significant amount of capital at risk. Also, by sharing in any annual operating loss of the partnership, all general partners, including ELT members, have a direct incentive to manage risk and focus on the short- and long-term financial results of the partnership.”

Bank of America

CEO: Brian Moynihan
2021 total compensation: $23,729,169
2021 direct compensation*: $32 million
2020: $25,940,571
2019: $26,039,213
2021 vs. 2020: -$2,211,402 (-9%)

Median employee annual total compensation: $102,497
CEO pay ratio: 232:1

Remark: “Each year, our Compensation and Human Capital Committee reviews our named executive officers’ performance using a balanced and disciplined approach to determine their base salaries and variable compensation awards. The approach for 2021 included a range of performance and governance considerations as inputs into compensation decisions, which remain largely unchanged from prior years,” according to the firm’s proxy statement. “The committee’s compensation decision process involves a robust review of company and line of business performance as well as individual performance for each named executive officer.”

*In terms of the company’s calculation of Moynihan’s direct compensation, his pay rose last year to $32 million from $24.5 million in 2020.

Morgan Stanley

CEO: James Gorman
2021 total compensation: $34,941,635
2020: $29,558,524
2019: $31,642,395
2021 vs. 2020: $5,383,111 (18%)

Other notable executive compensation: Head of Wealth Management Andrew Saperstein ($19,217,923)

Median annual total compensation of all employees (other than CEO): $137,069
CEO pay ratio: 255:1

Remark: “The CMDS Committee follows a prescribed framework for determining executive compensation to ensure that Morgan Stanley’s compensation program delivers pay for sustainable performance, aligns compensation with shareholders’ interests, is motivating and competitive, and reflects shareholder input and best practices in corporate governance, risk management and regulatory principles,” according to the firm’s proxy statement. “Based on an evaluation of 2021 company and CEO performance, including record financial performance and significant progress in implementing a long-term strategy that has led to transformational change and a resilient business model, the CMDS Committee set CEO total compensation for 2021 at $35 million, with shareholder-aligned features.”

J.P. Morgan Chase

CEO: Jamie Dimon
2021 total compensation: $84,428,145 (or $31,815,729 excluding “one-time special award”)
2020: $31,664,554
2019: $31,612,616
2021 vs. 2020: $52,763,591 (167%)

Other notable executive compensation: Consumer & Community Banking CEO Gordon Smith ($22,550,506); Asset & Wealth Management CEO Mary Callahan Erdoes ($20,805,000)

Annual total compensation of estimated median employee: $92,112
CEO pay ratio: 917:1; or 346:1 excluding Dimon’s one-time award

Remark: “The special award granted to Mr. Dimon reflects the board's desire for him to continue to lead the firm for a further significant number of years,” according to the firm’s annual proxy statement. “In making the special award, the board considered the importance of Mr. Dimon's continuing, long-term stewardship of the firm, leadership continuity, and management succession planning amidst a highly competitive landscape for executive leadership talent. The board also took into account other factors, including the firm's strong performance under Mr. Dimon’s stewardship since 2005, his exemplary leadership, and his significant contributions to the firm’s success during his tenure. The nature of this special award reflects the unique inflection point in Mr. Dimon’s tenure and the importance of his continued leadership and support of the firm's longer-term succession plans.”