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Bonus Watch ’14: Too Lucrative To Shrink

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As long as the CEOs of U.S. Bank and PNC have to settle for business class and summer rentals in the Hamptons, you can count Jamie and Lloyd and Brian and Mike out of getting smaller.

Compensation at U.S. banks is structured in a way that offers little incentive for big banks to slim down, says new research from KBW analyst Fred Cannon.

While regulatory changes have punished the shareholders of big banks by cutting into their profitability, trapping capital and capping returns, the median annual compensation of big bank executives is more than two and a half times as high as those at large regional banks, says Mr. Cannon.

His analysis also shows that bank executive compensation is “closely and positively” related to the bank’s size, but not generally related to stock returns.

It Pays to Be Big in Banking, Says KBW [WSJ MoneyBeat blog]


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