Why Does America Hate Wall Street but Love Silicon Valley?

Fox News suggested the public views bankers as the richest executives, but their compensation doesn't come close to the executives in this sector.

Mar 1, 2014 at 1:00PM

Wall Street executives are overpaid and ever-greedy, right? Bankers are just a bunch of fat cats, not worthy of their multi-million dollar compensation packages.

That seems to be a common narrative among most Americans. But the ugly picture being painted may be unfairly dishing the hate in the direction of Wall Street.

Fox News's Neil Cavuto recently did an interview with Patriot National Bank Chairman Michael Carrazza, and suggested that there's a double-standard in the pay of today's top executives.

Cavuto noted that public opinion would suggest tech CEOs like Mark Zuckerberg are daredevils well worth their billions, while bank executives are, "just devils not worth their millions."

Which executives are really cashing in?
Let's take a look at some of the top CEO compensation packages in 2013, and see if the discrepancy is as big as suggested.

Top Executive Compensation in 2013
CompanyCEOTotal compensation-2013
Apple Tim Cook $4 million
Hewlett-Packard Meg Whitman $18 million
Oracle Larry Ellison $78 million
JPMorgan Chase (NYSE:JPM) Jamie Dimon $20 million
Citigroup (NYSE:C) Michael Corbat $14 million
Bank of America (NYSE:BAC) Brian Moynihan $14 million

Source: Company filing.

The pay to banking CEOs is certainly more consistent. Jamie Dimon has been CEO longer than Corbat or Moynihan, he manages the most assets, and therefore is paid the most. Corbat and Moynihan manage similar-sized banks and have similar compensation. 

The tech CEOs, on the other hand, are all over the place. This is because, in general, there's larger amounts of stock compensation in the tech sector than the financial sector.

Stock compensation
JPMorgan and Bank of America gave its CEOs approximately $10 million in stock options in 2012. While Citigroup compensated its CEO with approximately $6 million in stock awards. 


Zuckerberg and gang are laughing their way to the bank too. Photo: Brian Solis

These numbers are dwarfed by the stock compensation of tech executives.

Apple awarded Tim Cook with more than $350 million in stock in 2011. Google's Eric Schmidt received over $93 million in stock and option awards in 2011, and in 2012 Facebook awarded its COO and CFO a combined $42 million in stock awards. 

The tech sector's silver bullet
According to Cavuto, every time he asks about the discrepancy in pay he gets the same answer, "But we didn't embarrass the United States government and cost the taxpayers money." 

To which, Michael Carrazza responded, in so many words, maybe they shouldn't bite the hand that has fed them. In fact, it's Wall Street that helped supply the money tech companies needed to grow and prosper.

Carrazza went on to suggest the poor image of bankers is media-driven -- specifically, the liberal media. A point I was planning to ignore, until I discovered the political leanings of each industry.

Financial Donations Opensecrets

Source: opensecrets.org

The financial industry, unquestionably, is Republican-leaning. The tech industry, though it's not as obvious across the board, tends to lean Democrat with its donations. While I still don't believe the liberal media is solely responsible for the poor image of bankers, it's interesting nonetheless to see where allegiances lie. 

Is there really a double standard?
Yes, there is a double-standard. But it's the nature of the industries at hand. Apple makes the phone you love, and Citigroup owns your debt. It's easy to love one and hate the other.  

Executive performance goals are listed on each companies proxy statement under DEF 14A. JPMorgan, Citigroup, and Bank of America improved upon those standards from 2012 to 2013, and thus, the CEOs deserve to be rewarded for their efforts. 

For those that still have a problem with the compensation of banking executives, I'll reiterate what was said in Fox's interview, "If you going to hit one on outrageous pay, hit'em all."

The big banks biggest nightmare
Do you hate your bank? If you're like most Americans, chances are good that you answered yes to that question. While that's not great news for consumers, it certainly creates opportunity for savvy investors. That's because there's a brand-new company that's revolutionizing banking, and is poised to kill the hated traditional brick-and-mortar banking model. And amazingly, despite its rapid growth, this company is still flying under the radar of Wall Street. For the name and details on this company, click here to access our new special free report.

Dave Koppenheffer owns shares of Citigroup. The Motley Fool recommends Apple, Bank of America, Facebook, and Google. The Motley Fool owns shares of Apple, Bank of America, Citigroup, Facebook, Google, and JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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