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Big Bank CEOs, Ranked by Skin in the Game

By John Maxfield – Mar 3, 2016 at 2:40PM

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JPMorgan Chase’s Jamie Dimon and Goldman Sachs’ Lloyd Blankfein tower over their counterparts when it comes to insider ownership.


Some bank CEOs have more on the line than others. Image credit: iStock/Thinkstock.

Stock ownership is one of the most important metrics that investors can use to determine whether the interest of a company's CEO is aligned with shareholders. It's with this in mind that I created the following chart, which shows the value of stock controlled by the CEOs of JPMorgan Chase (JPM -1.75%), Goldman Sachs (GS -1.67%), Wells Fargo (WFC -0.97%), Bank of America (BAC -2.23%), Citigroup (C -2.19%), and Morgan Stanley (MS -1.12%).


Excludes deferred and unvested stock units. Share prices as of February 24, 2016. Data sources: 2015 Proxy Statements for JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs, and Morgan Stanley.

The chart makes it clear that the CEOs of JPMorgan Chase and Goldman Sachs are closely aligned with their shareholders. It's an understatement to say that Dimon and Blankfein have skin in the game. Their respective positions in JPMorgan Chase and Goldman Sachs represent generational wealth in and of themselves. Shareholders in these companies needn't worry about alignment of interest; it's present in spades.

Bank of America, Citigroup, and Morgan Stanley are on the other side of the spectrum. While their CEOs hold large amounts of their companies' shares, they nevertheless earn more in total compensation each year. This implies that the CEOs of these firms have as much if not more incentive to juice short-term revenue as they do long-term stability.

CEO

Bank

2015 Total Compensation

Value of Shares Owned*

Jamie Dimon

JPMorgan Chase

$27 million

$372 million

Lloyd Blankfein

Goldman Sachs

$23 million

$326 million

James Gorman

Morgan Stanley

$21 million

$16 million

Michael Corbat

Citigroup

$16.5 million

$12 million

Brian Moynihan

Bank of America

$16 million

$9 million

*Excludes unvested stocks and options. Share prices as of Feb. 24, 2016. In Dimon and Corbat's cases, moreover, both CEOs purchased additional shares on the open market in 2016. These are reflected in the table. **Wells Fargo is excluded from the table, as it has yet to report 2015 executive compensation. Data source: 2015 Proxy Statements for JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs, and Morgan Stanley. Data from The Wall Street Journal was also used in the case of 2015 compensation at Goldman Sachs and Morgan Stanley.

To be fair, once you factor in restricted stock units that haven't vested or are otherwise deferred, the situation looks better for Bank of America's Moynihan in particular. According to the bank's 2015 proxy statement, Moynihan is due roughly 2.2 million shares of stock under past compensation awards -- though the lion's share of those are likely to be cash-settled as opposed to stock-settled. But either way, it's still a far cry from JPMorgan's Dimon, who has purchased 1.5 million shares of JPMorgan Chase outright on the open market since 2009.

The second thing to note is the relationship between insider ownership and the performance of these companies' shares over the past decade. As you can see in the chart below, investments in JPMorgan Chase, Wells Fargo, and Goldman Sachs have handily outperformed shares of Bank of America, Citigroup, and Morgan Stanley.

The relationship between insider ownership and performance isn't a coincidence. JPMorgan's Dimon and Goldman's Blankfein have both been at the helm of their banks for longer than the current CEOs of Bank of America, Citigroup, and Morgan Stanley, all of whom were promoted after their successors left during or soon after the financial crisis. This has not only given Dimon and Blankfein longer to accumulate their stakes, but an even more important implication is that their banks' returns weren't weighed down by the same dismal performance that led to the resignations of the former CEOs at the other three banks.

In short, it seems fair to assume that the superiority of JPMorgan Chase and Goldman Sachs (as well as Wells Fargo) going into the crisis has since been buttressed by the increasingly close alignment between their CEOs and shareholders in its wake.


John Maxfield owns shares of Bank of America, Goldman Sachs, and Wells Fargo. The Motley Fool owns shares of and recommends Wells Fargo. The Motley Fool has the following options: short March 2016 $52 puts on Wells Fargo. The Motley Fool recommends Bank of America. 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.

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Stocks Mentioned

Citigroup Stock Quote
Citigroup
C
$47.23 (-2.19%) $-1.06
Bank of America Stock Quote
Bank of America
BAC
$36.86 (-2.23%) $0.84
Goldman Sachs Stock Quote
Goldman Sachs
GS
$382.36 (-1.67%) $-6.50
JPMorgan Chase Stock Quote
JPMorgan Chase
JPM
$134.35 (-1.75%) $-2.39
Morgan Stanley Stock Quote
Morgan Stanley
MS
$89.89 (-1.12%) $-1.02
Wells Fargo Stock Quote
Wells Fargo
WFC
$46.98 (-0.97%) $0.46

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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