May 2 (Bloomberg News) — Richard Fairbank, chief executive officer of Capital One Financial Corp. (COF), made $19.2 million last year, more than Goldman Sachs Group Inc. (GS)’s Lloyd Blankfein, as the heads of Main Street banks closed the Wall Street pay gap.
The chiefs of the five largest regional lenders earned 74 cents in 2011 for every dollar awarded to the CEOs of the six biggest U.S. banks by assets, up from 38 cents in 2007, according to data compiled by Bloomberg. The compensation spread has narrowed as the smaller firms, which have on average one- sixth the assets, provided better returns for investors.
Fairbank’s pay was second only to the $23 million awarded to JPMorgan Chase & Co. (JPM)’s Jamie Dimon among leaders of the 11 biggest U.S. banks by assets. Jim Rohr, head of Pittsburgh-based PNC Financial Services Group Inc. (PNC), the eighth-largest lender, made $8 million last year, more than the $7 million earned by Bank of America Corp. (BAC)’s Brian T. Moynihan, who runs the nation’s second-biggest bank.
“It’s like tortoise versus the hare,” said Joseph Sorrentino, a managing director at compensation consultant Steven Hall & Partners. “Wall Street firms are pushing the risk envelope, which in good years meant big payouts, but since the crisis has meant a lot less or no payouts.”
‘World Has Changed’
Regional lenders, meanwhile, are getting bigger. Capital One’s Fairbank, 61, has spent more than $28 billion on acquisitions since 2005 to expand beyond the company’s core credit-card business. In February, he purchased ING Groep NV’s online U.S. bank, a deal that added $84.4 billion in deposits. PNC this year bought the U.S. retail-banking and related credit- card assets of Royal Bank of Canada, a move that helped PNC extend its reach in the Southeast.
The increase in customers and earnings at regional lenders could lead to higher CEO pay, compensation consultants said.
CEO pay at the largest banks is more dependent on a profit revival, which is linked to global economic improvements, such as a resolution of Europe’s sovereign-debt crisis, compensation consultants said.
“The world has changed in Wall Street pay, there’s no doubt about it,” said Steven Hall’s Sorrentino, who’s based in New York. “Until the economy is growing at a really good rate, profits are back to pre-crisis levels and the stock market is going at a good clip, you’re just not going to see those pay levels.”