Goldman Sachs CEO David Solomon was paid $23 million last year, a third of what his predecessor received in 2007. Other Goldman employees haven't fared much better.
Compensation per employee is down by 61% at the Wall Street firm when adjusted for nominal wage growth in the period, according to company filings and calculations by Bloomberg.
Goldman had the sharpest pay decline among a dozen of the largest U.S. and European banks, followed by Credit Suisse Group at 46%. The group had an average reduction of 14%.
Thanks in part to tax cuts and strong consumer spending, the biggest U.S. banks are more profitable than ever, and European lenders are recovering. That hasn't translated, however, into better pay for traders and investment bankers. And financial companies joining the shift to automation that's also reshaping other industries may mean the pre-crisis period will forever be the high water mark for outsize salaries in banking.
Pay cuts have been most dramatic at relatively small Wall Street firms that focus on investment banking, securities trading and wealth management, and lack the large retail operations of rivals.
It's not only that bonuses have declined since the 2008 crisis; falling compensation reflects a shift from risky trading to consumer banking and wealth management. Banks also have raced to adopt high-end technology, changing their mix of employees in the process.
"Business has transformed over the past decade," said Richard Lipstein, managing director in the financial-services practice at recruiting firm Gilbert Tweed International. "Traders have been the worst hit as trading isn't what it used to be. Now jobs are in technology and retail. You may add more employees, but those are not as high-paying as traders."
Goldman Sachs, once the symbol of cutthroat trading, has ventured into consumer services, credit cards and transaction banking. Credit Suisse has focused more on wealth management, while moving support functions to lower-cost locations like Poland and India to cut costs.
A 36% drop in compensation at Deutsche Bank when adjusted for rising European wages was partly due to the 2010 acquisition of domestic retail bank Deutsche Postbank and the addition of 20,000 tellers, mortgage bankers and other lower-paid personnel.
Deutsche Bank's traders and bankers, once highly compensated, have seen their pay diminish over the past 12 years as well. The pay calculations take into account the nominal wage increase for the region where each bank is headquartered, which ranged from 17% to 30%.
An equities dealer who joined the company just before the financial crisis said his total compensation was about half of what it was in 2007 by the time he left at the end of last year, before Deutsche Bank announced it would close the division. The dealer asked not to be identified to avoid hurting his relationship with his current employer.
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Cut in half
His experience reflects the typical fate of sales and trading staff on Wall Street, according to Julian Bell, a managing director at Sheffield Haworth, a recruitment firm specializing in banks.
Average compensation for midlevel employees in that business has been cut in half, to a range of $400,000 to $800,000, data compiled by Sheffield Haworth show.
Investment bankers had their pay reduced by about a third, with a mid-level banker now getting $600,000 to $950,000, Bell said. Compensation for managing directors has fallen roughly 30%, to an average of $1.5 million to $2 million.
"There's still fierce competition for investment bankers because the advisory boutiques have grabbed a lot of market share and can hijack top talent from the big banks," said Mr. Bell, who heads the investment-banking practice. "So the full-service banks still have to pay more than they'd like to for their bankers. The same isn't true for traders, as trading revenue and profitability have shrunk and you still need big balance sheets to be successful."
Another change since the crisis is in the makeup of compensation. Big earners used to get relatively small salaries and much larger cash bonuses. Salaries have gone up, while cash bonuses have shrunk.
The European Union even passed legislation that restricted the size of a banker's bonus relative to salary. And bonuses in Europe and the U.S. are now mostly in the form of deferred stock awards, with the aim of aligning an employee's long-term interests with the well-being of his or her firm.
At Goldman Sachs, the $27 million cash bonus accounted for almost half of the CEO's compensation in 2007. Last year, it was $5.7 million, or about a quarter. Deferred compensation also prevents top earners from leaving easily.
"I'm forever talking to bank executives who want to get out, but they can't walk away from their stock that hasn't vested," said John Burr, managing partner at executive-search firm Westcott Black Partners. "And other financial firms are looking to hire talent from the banks, but they balk at buying senior people's deferred comp."
At a few of the largest banks, per-worker compensation has risen in the past decade, with the biggest increases at Bank of America Corp. and Barclays. Barclays has been shrinking its retail footprint globally, including a 2017 exit from Africa that eliminated 40,000 lower-paid positions. Also, the British pound's 20% decline against the dollar and several other currencies over the past 10 years has increased payroll costs in the U.S. and Asia, which account for more than a third of the bank's head count.
Bank of America closed more than 1,000 branches around the U.S. and cut some 80,000 jobs after the crisis. It's also reduced back-office jobs that could be replaced with technology, while hiring pricier client-facing employees, contributing to higher per-employee compensation.
And Bank of America gave employees special bonuses following the Trump administration's corporate-tax cut, and increased its minimum hourly pay.
Wells Fargo & Co., which is focused mostly on consumer banking and has a relatively small investment-banking arm, has been adding compliance staff after a series of scandals related to the handling of its customers in recent years. Those positions are higher-paid than tellers or other branch personnel.
"Retail banking still requires a local presence," said Jeanne Branthover, managing partner at recruitment firm DHR International. "People still like to go to the branch, so the banks still have tellers and wealth managers in branches, and some banks are expanding again. Pay was never as significant for the branch staff, but it's been holding up too, rising along with average wages."