Occupy Wall Street has reawakened the negative sentiment many people in the country feel toward investment banks and those who run them. So it got me curious about how compensation on Wall Street has changed over the past decade.
I've always operated under the investing assumption that if you hate paying for something, invest in it, because it's likely the service is so needed that there is a strong competitive moat. But Wall Street is different. My perception was that the compensation had run amok on Wall Street at the expense of investors. My findings were surprisingly to the contrary.
The big man on the block
Of course, I started with a look at the biggest, and arguably baddest, investment bank, Goldman Sachs
Source: SEC filings.
In fact, compensation has followed the stock price almost exactly, while earnings have grown faster than both. Pay may have been too high to start with, but we certainly weren't protesting that a decade ago.
At JPMorgan Chase
Source: SEC filings.
It's also is important to note that between 2001 and 2010, JPMorgan's headcount increased from 95,812 to 239,831 people, so the increased pay was spread out.
So it turns out that we can profit alongside employees when banks are successful, and the same can be said on the downside if we look at Citigroup
Maybe we can get rich, too
There's no doubt that pay on Wall Street is astronomically high compared with the rest of the country. But if you're mad about it, maybe investing alongside Wall Street isn't such a bad idea. It turns out that the companies are paying you back just as fast as compensation is rising.
More traditional banks such as Wells Fargo
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Fool contributor Travis Hoium has no position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw.
The Motley Fool owns shares of Wells Fargo, JPMorgan Chase, and Citigroup and has created a covered strangle position on Wells Fargo. Motley Fool newsletter services have recommended buying shares of Goldman Sachs. Try any of our Foolish newsletter services free for 30 days. 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.