Posted April 15, 2013 by Eric Shirey in Investment

JPMorgan Chase & Co (NYSE:JPM) saves on compensation costs as it reduces


Northern, WI 04/15/2013 (avauncer) – In the first quarter, JPMorgan Chase & Co (NYSE:JPM) (closed: $49.01, Down by 0.61%)’s corporate and investment bank has generated 9 percent more revenue but 7 percent less money was set aside for employee compensation. The $3.38 billion that had been aligned for compensation costs accounted for 34 percent of the company’s revenue which excluded accounting adjustments and was down from the 35 percent that it stood at a year earlier. Investment banks have been under pressure to cut costs on all fronts as the revenue that is generated from trading, underwriting and advisory dropped by almost 10 percent from 2010-2012, at the nine largest global firms.

Riding a see-saw

Executives have been seeking to lower their ratio of compensation-to revenue and been struggling to retain their top traders and bankers. In February, Mike Cavanagh who co-head’s the corporate and investment bank for the company, told investors that they strongly believe in pay for performance. He said that the scale of the bank can help it keep the ratio at a minimum level even as it offers its top employees pay packages that equal any other in the industry. Last year, JP Morgan had merged its investment bank with the corporate bank that the firm owns as well as the security and treasury units. Daniel and Cavanagh had been put in charge of the division.

The amount that has been put aside for compensation costs  includes pay, benefits, bonuses and costs of deferred pay that have been carried forward from previous years. The figures for average pay are not indicative of what employees actually receive. The total compensation expense is divided by the total number of employees to reach these figures.

Eric Shirey

Eric Shireya is a former newspaper section editor and reporter who has been reporting on Fashion and Lifestyle for about 10 years. His work has been published in national business trade magazines, and can be found on wire services, in daily newspapers, in university alumni magazines, on the web, in newsletters, and more. His career highlights have included interviewing Bob Hope, laughing through a phone conversation with Richard Simmons, chatting with Melissa Etheridge, and enduring a press conference in a hot air balloon.