The move by big banks and securities firms to dole out more stock and less cash to employees could help counter political anger about Wall Street's pay culture. But shareholders likely will likely pay for it for years.
Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc., J.P. Morgan Chase & Co. and Morgan Stanley said as part of their fourth-quarter earnings announcements that 2009 pay will include a greater percentage of stock than in previous years.
Such stock typically is in the form of restricted shares that can't be sold for a certain period. The goal is to tether employees more tightly to their company's share price and bottom line, reducing any temptation to make bets that could blow up later. Some shareholders also view strong employee ownership as a positive sign.
The downside: Some analysts estimate the shift to more stock could increase the number of shares outstanding at such companies by as much as 4%. All those new shares would dilute per-share earnings.
Sunday, January 24, 2010
Wall Street's Pay Shift Augurs Ill for Stockholders
The Wall Street Journal reports:
