Few workplace issues get as much attention as the question of salary transparency, which has been a hot-button topic for years. While there’s an ongoing push toward completely public salary disclosures in the European Union, the U.S. has mostly lagged behind, with compensation historically deemed to be a private, personal matter. A new report says Gen-Z is challenging these norms, as it is with many old-fashioned workplace traditions. Could this prompt your company to be open about your workers’ pay, and even to encourage your staff to chat about the topic? And what benefits can you expect if you make the change?
New global data from Kickresume, the Slovakia-based AI résumé building service, found that only 31 percent of people say salaries are openly discussed at their job, and 37 percent say their employers actually ban talking about salaries, Newsweek reports. But nearly 40 percent of Gen-Z respondents to the survey said that they openly discuss salaries at their workplace—far above the average across all age cohorts since just 30 percent of Millennials and 22 percent of Gen-X respondents felt the same way, and one in three Gen-X workers say they actually prefer not to discuss the matter at all. In fact, 18 percent of Gen-Z respondents said they are so open about pay transparency that they talk about it even if their employer bans the topic.
Digging into what’s going on here, the survey also found that an average of 32 percent of respondents remain curious about what their colleagues earn and are interested when someone discusses the topic. Gen-Z is more curious, with 38 percent feeling this way.
As to cultural differences about the matter, while 34 percent of European respondents say salary is openly discussed, just 27 percent of Americans say the same, and only 24 percent of respondents from Asia. Kickresume’s report says the U.S. is actually leading the movement to “[keep] pay talk off the table, with one in three workers saying they simply don’t want to discuss salary at all.”
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What’s your takeaway from this data?
Experts have long argued that pay transparency is a good thing for the workforce, often citing a noted study in which some people were kept in the dark about bonuses and pay and others were informed of their colleagues’ details. Workers who weren’t told about pay levels actually performed worse in the experiment.
Other research suggests that the trend for secrecy around compensation is slowly changing, with more and more job postings explicitly listing salary levels, even as an increasing number of states are legislating to make all companies post salary levels publicly.
Interestingly, in 2022, a LinkedIn survey on workforce confidence found that workers at smaller businesses were less likely than workers in larger enterprises to feel that salary discussions are discouraged by their employer. It’s easy to imagine that in a smaller, more family-like company the sense of camaraderie and familiarity with colleagues encourages this idea of openness. In larger enterprises, management may be uncomfortable with workers at similar levels and with similar skills discovering that, for whatever reasons, their pay levels are different—even though the National Labor Relations Act says workers have the right to talk to each other about pay.
Meanwhile, Newsweek pointed to a February survey from Delaware-based essay writing service EduBirdie that found 58 percent of Gen-Z people surveyed said they would explicitly avoid applying for jobs at employers where salaries aren’t disclosed ahead of time.
Essentially, there’s a large body of evidence that being open about salaries promotes employee well-being and boosts the sense of equality and fairness—assuming that you are a fair employer, and, for example, pay female workers the same rates as male ones. The EU is so set on the idea that member states have to implement the Pay Transparency Directive by next June as part of an effort to make such transparency commonplace across the continent.
Savvy business owners may see this new research as a prompt to promote pay and compensation openness among their employees, since the change may boost your productivity. You may have to put up with some difficult discussions about disparities in the short term, however.
A manager made a terrible mistake and accidentally sent a spreadsheet with the whole department’s salaries to an employee, according to a post on Reddit’s antiwork group.
The employee then discovered that they were earning $15,000 less than a similarly situated coworker and that even the new hire is making more than they are.
This is a rotten position for a boss to be in. Sharing confidential information, such as salaries, in violation of company policy, can get someone in real trouble. And having an employee discover that they are woefully underpaid is also a nightmare. You should avoid this scenario at all costs. I will teach you how, and this works every time it’s tried:
The secret to avoiding bad reactions to accidental salary disclosure
Are you ready? Because this may be a little bit difficult to set up but once you do, I guarantee you won’t have any problems with salary leaks. Here it is:
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Stop paying people less than they deserve.
That’s it. That’s the secret. If the poster had received a salary sheet that showed that all similarly situated employees were earning roughly the same, there wouldn’t have been a post, and there wouldn’t have been a problem.
So, paying people properly might be a little more complicated than just keeping salaries confidential, so here’s how to keep salaries at the proper levels.
First, do an audit
You need to get everything corrected. And that means conducting an audit, at least every six months, says Brenda Neckvatal, a human results professional and author of The Leadership Survival Manual. “If you are monitoring compensation on a regular basis, this won’t happen.”
Regular audits catch inequities before employees do, and before they hit Reddit.
Embarrassing (and often illegal) salary discrepancies often happen through error or bad company policies, rather than maliciousness. But when you have a situation where two people doing the same job have some sort of difference in race, gender, or other protected characteristic, it can be hard to prove to a court that you’re just bad at compensation.
Fix your bad policies
Bad salaries happen because of bad policies. Some of these policies you’ll want to review, revise, and eliminate could be:
Allowing managers to make job offers or promotions without consulting human resources. It’s not that HR has power over what you should pay someone; it’s that they have the knowledge to say, “Hey, we have three people doing this job and they make $X. You’re offering $X+15k, and that will cause internal equity problems.
Limiting the raise you can give to an internal candidate. Many companies have policies that limit an internal candidate to, say, a 10 percent raise. But if you promote them into a position where everyone else is making 20 percent more than they were, you could end up with bad feelings and the loss of a good candidate. Your policy should be to offer internal and external candidates the same amount.
These two bad policies permeate businesses, stressing the ideas that they save money and gives managers freedom. But it can make for messy situations.
Then, make sure it doesn’t happen again by changing how you hire.
Set the salary for the role before you interview
Don’t go into interviews with vague ideas. Many states require you to post your salary ranges, but I still see ridiculously wide compensation spans. Don’t do that.
Before you even post the job, figure out what the salary for that role should be. Yes, there can be variances depending on certain skills. Like, for instance, you might be willing to pay $5,000 more for someone who can speak Spanish or has a master’s degree. That type of difference is fine (assuming they will help with the role.
Take your qualifications for the position and create a grid that you can match your candidates up against. The goal is that, after interviewing candidates, there will be a clear salary that each one would match up to. That’s the salary you offer.
Don’t negotiate
Candidates are taught that there is always a little bit more money out there and to ask. But not everyone does, and not everyone does so well.
It makes zero sense to pay someone more money because they ask. People should be paid based on their skills.
So make your highest and best offer first. People will still try to negotiate, but just say no, this is my highest and best offer.
What to do if your employee finds out they are underpaid?
Now, what would you do if you were this Redditor’s boss? Apologize profusely, get the salary increased to the proper level, and provide back pay.
That’s the right thing to do. Then go back and audit all positions to make sure this doesn’t happen again.
Check your attachments before you hit send. But honestly, if people are paid fairly, there’s no reason to keep salaries confidential other than tradition.
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.
A billboard near West Virginia University questions vaccine manufacturer protections, a topic in the news as Health and Human Services Secretary Robert F. Kennedy Jr. seeks to change vaccine policy.
“Vaccine makers are exempt from all liability for vaccine injury and death,” says the billboard, which was sponsored by West Virginians for Health Freedom, a group that advocates for parental choice on vaccine requirements and risks.
The billboard has advertised vaccine-skeptical perspectives for years, and passing motorists might wonder if the claim is true. So PolitiFact West Virginia took a closer look.
Dr. Alvin Moss — a WVU professor of nephrology and medicine who was referred to PolitiFact West Virginia by West Virginians For Health Freedom — pointed to an academic paper that described vaccine manufacturers’ legal immunities as “broad” and a description of a Supreme Court case that characterized the industry’s legal protections as “significant.” (He said he was speaking in his personal capacity, not on behalf of his employer.)
However, broad and significant are not synonymous with “all,” which is the word the billboard used. In practice, the laws that provide manufacturers with extensive liability protections do include exceptions and limits that allow lawsuits in some circumstances.
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Lawsuits are allowed, eventually, under the National Childhood Vaccine Injury Act
The most important law governing vaccine liability is the National Childhood Vaccine Injury Act of 1986. This law created the National Vaccine Injury Compensation Program, a no-fault system for people who believe they have been injured by routinely recommended childhood vaccines. A fund is able to pay out awards to people claiming injury; the fund is filled by revenues from a 75 cent tax per disease prevented on each vaccine dose.
Initially, this law clamps down on the ability to pursue a lawsuit. Under the act, people who receive a covered vaccine must file a claim through the compensation program before they file suit. They must then wait for 240 days after filing to see if they are presented with an acceptable offer. If the program fails to issue a decision during that period, or if the petitioner loses their case, or they are awarded compensation but the petitioner rejects the program’s offer, the person can then file a civil lawsuit against the vaccine manufacturer.
There are other limits. A 2011 decision in the Supreme Court case Bruesewitz v. Wyeth held that manufacturers cannot be sued over a claim related to design defects. Suits related to warnings are allowed only if the manufacturer failed to warn the doctor, not the patient.
Other claims, like those related to negligence and fraud, can be pursued, though they are considered harder to prove.
An earlier version of the billboard from 2023. (Bob Britten)
Not all vaccines are covered by the 1986 law
The law limits the types of vaccines that receive liability protections, said Renee Gentry, a law professor and director of the Vaccine Injury Litigation Clinic at George Washington University Law School.
The law covers routine childhood vaccines and does not address adult-only vaccines such as those for shingles or pneumonia. Manufacturers of these vaccines may be, and have been, sued.
COVID-19 vaccines fall under the Public Readiness and Emergency Preparedness Act. This law offers broader liability protection, effectively shielding manufacturers from litigation.
So while manufacturers are protected from lawsuits for some of the vaccines they make, these legal protections aren’t across-the-board, said Dorit Reiss, a law professor who specializes in vaccine liability. For instance, Reiss said, more than 200 cases have been brought against Merck related to its Gardasil vaccine, which aims to protect against HPV. Some of that litigation is ongoing.
Moss, the doctor who was referred to PolitiFact West Virginia by West Virginians For Health Freedom, downplayed the protections for adult vaccines, saying that “childhood vaccines constitute a very high percentage of vaccines given.”
Data from the federal Health Resources and Services Administration shows that childhood vaccinations are more numerous than adult vaccines, but adult vaccines still account for a large number of vaccines given. The influenza vaccine, which is mostly given to adults, had more than 2.5 billion doses distributed between Jan. 1, 2006, and Dec. 31, 2023.
Our ruling
On its billboard, West Virginians For Health Freedom said, “Vaccine makers are exempt from all liability for vaccine injury and death.”
Under federal law, vaccine manufacturers do benefit from significant lawsuit protections, including being shielded against suits about design defects. These protections are paired with a fund that is empowered to make compensation payments to injured parties in lieu of filing a lawsuit.
However, vaccine makers’ liability protections are not — as the billboard says — unlimited. Companies may be sued if the injured party rejects the compensation fund’s offer; if negligence and fraud are alleged; and when a company’s vaccines are intended for adult use.
The victims of the Ramallah lynching, the bus bombing in Kfar Darom, the Ben Yehuda Street bombing in Jerusalem, and the French Hill suicide bombing are among those who will receive compensation.
The Israel Enforcement and Collection Authority (ECA) announced on Sunday that its operational arm, the Execution Office, collected NIS 25 million for families for the families of those killed and wounded in acts of terrorism.
The Execution Office is the official government body responsible for enforcing civil judgments in Israel. The funds collected from the Palestinian Authority (PA) are the result of the lines placed on funds related to terrorist activities.
Funds collected from the Palestinian Authority
The funds are from monies by the Palestinian Authority to families of those who committed acts of terrorism. The ECA is involved in enforcing civil judgments, including collecting damages awarded against individuals involved in terrorist activities. This includes compensation for victims and families affected by acts of terrorism.
One notable case involves an enforcement file initiated in 2019 by 41 families who are victims of terror. It rests on a civil ruling against the Palestinian Authority handed down in the Jerusalem District Court.
The court had ordered compensation for various terrorist attacks, including the lynching in Ramallah, the bus bombing in Kfar Darom, the Ben Yehuda Street bombing in Jerusalem, the French Hill suicide bombing, the Megiddo junction car bomb, the Alon Moreh infiltration, and other terror incidents.
Israelis attend a memorial ceremony for the victims of the 1948 Ben Yehuda Street bombing in Jerusalem on February 20, 2014. (credit: YONATAN SINDEL/FLASH90)
In this case, the total debt amounted to NIS 67,636,330. Through enforcement actions, the authority collected 23,698,281 NIS from PA funds held by the State, along with additional amounts for specific families affected by terror attacks in Jerusalem and the Sbarro restaurant bombing.
These actions are part of Israel’s broader efforts to ensure that victims of terrorism receive compensation, even when the perpetrators or their affiliates are state actors, said the ECA.
Oracleannounced that longtime CEO Safra Catz will be replaced by two new internal hires: Clay Magouyrk, 39, and Mike Sicilia, 54. The outgoing CEO described the two as “a match made in heaven”—two technical executives who can further propel Oracle into the AI era.
The move will marry veteran industry leadership from Sicilia with younger cloud-native expertise in Magouyrk. The latter is a founding member of the $920 billion tech firm’s cloud engineering team and Oracle named him president of cloud infrastructure in June 2025. Before joining Oracle in 2014, Magouyrk was a senior engineer at Amazon and Amazon Web Services. Sicilia joined Oracle after it acquired Primavera Systems in 2008, where Sicilia was chief technology officer. He later served as executive vice president in Oracle’s industries unit and in its global business units. In June, Oracle named him president in industries.
“I’m really looking forward to this stage,” said Catz during an investor call on Monday. “But it is absolutely time. You want to make a transition like this when things are great and when I’m handing it to two of the guys—actually a whole team—that brought Oracle here. This is ideal.”
In connection with their promotions, Oracle will give its Millennial and Gen X duo stock option grants valued at $250 million for Magouyrk and $100 million for the Sicilia. The leadership shakeup will also see Douglas Kehring promoted to principal financial officer at Oracle in the place of Catz. Oracle chief technology officer Larry Ellison will retain his CTO title and role as board chair.
“The company is being recognized as an innovator and leader in AI and our momentum has been nothing less than spectacular—and it’s only the beginning,” Catz told investors. “With this success in mind, Larry and I thought timing was perfect to recognize and promote several executives who have not only been instrumental in helping pivot the company, but who will be critical to leading us as we move forward.”
With the massive stock option grants, Oracle is incentivizing Magouyrk and Sicilia to stay with Oracle until at least 2029, with 80% of each grant vesting over four years. The remaining 20% will vest over a three-year period but they must achieve specific revenue metrics for the performance options to vest, although Oracle did not comment on or disclose the specific metrics. The grants will only pay off if Oracle’s stock price rises. An Oracle spokesperson declined to comment on the disparity of the grants between Magouyrk and Sicilia.
“Oracle is entering the AI era. I’ve never seen an opportunity on this scale before,” Ellison told investors on Monday. “The immense impact of AI across our economy is hard to grasp. The colossal size of the AI endeavor and the colossal size of the responsibility that goes along with it is difficult to imagine.”
Catz, meanwhile, will take on a new role as executive vice chair of the board. She has served as CEO of Oracle since 2014, when the board appointed Ellison chairman and CTO and named Catz and the late Mark Hurd as co-CEOs. Hurd took a leave of absence in 2019 and hedied shortly after. Ellison did not name a co-CEO to replace Hurd.
On Monday, Catz said the timing for the CEO transition was optimal. Catz is currently in the process of talking with Oracle customers and “introducing them to Clay and Mike” if they don’t know them already, she said.
“Safra led Oracle as we became a hyperscale cloud powerhouse—clearly demonstrated by our recent results,” Ellison said in a statement. “In her role as Vice Chair, Safra and I will be able to continue our 26-year partnership—helping to guide Oracle’s direction, growth and success.”
Oracle’s stock is up 98% year to date, and earlier this month announced cloud infrastructure revenues were up 55% to $3.3 billion and that its pending contracts had ballooned 359% to $455 billion. Oracle told investors it had signed four multi-billion dollars contracts with three customers in a single quarter. The company projected 77% growth to $18 billion for cloud infrastructure revenue in fiscal year 2026 and a bullish fiscal 2030 projection of $144 billion. The company is hosting a major event next month in Las Vegas called “Oracle AI World” to exhibit its new products.
“A few years ago, Clay and Mike committed Oracle’s Infrastructure and Applications businesses to AI—it’s paying off. They are both proven leaders, and I am looking forward to spending the coming years working side-by-side with them,” Ellison said. “Oracle’s future is bright.”
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Zambia’s government says it will seek more compensation for communities affected by a toxic spill from a Chinese-owned copper mine, if this is needed following a full assessment.
The spill of highly acidic mine-waste laden with toxic heavy metals happened in February when a dam that held waste from the Sino-Metals Leach Zambia copper mine collapsed, polluting a key river that is a major source of drinking water.
The firm apologised and pledged to compensate the victims but Zambia’s Vice-President Mutale Nalumango says that “may not be all”, adding that the safety of Zambians was “non-negotiable”.
Some embassies have warned their citizens to avoid the area due to the health risks.
Sino-Metals Leach Zambia mine is a subsidiary of China Nonferrous Metal Mining Group, which is owned by the Chinese government.
The company had initially reported that only 50,000 tonnes of waste material had spilled into waterways that connect to the Kafue River, near the northern city of Kitwe.
But a South Africa-based environmental company that said it was contracted by Sino-Metals to investigate the extent of the spill found that the disaster resulted in the release of 1.5 million tonnes of toxic material.
After its two-month investigation, Drizit company said approximately 900,000 cubic metres of toxic tailings were still present in the environment.
“These materials were found to contain dangerous levels of cyanide, arsenic, copper, zinc, lead, chromium, cadmium, and other pollutants posing significant long-term health risks, including organ damage, birth defects, and cancer,” the company said in a report last month.
Zambia’s Vice-President Mutale Nalumango (L) says the safety of citizens is non-negotiable [Mutale Nalumango/Facebook]
Sino-Metals disputed the accuracy of Drizit’s findings and in a statement to The Associated Press said that it had terminated its contract with the company, citing “contractual breaches”.
A travel advisory by the Finnish government last month showed that water samples from the area of the acid spill contained 24 different heavy metals, 16 of which, including nickel, lead, arsenic, zinc, and uranium, exceeded the safety thresholds set by the World Health Organization.
The US embassy also issued a health alert, ordering the immediate withdrawal of its personnel in Kitwe town and nearby areas due to concerns of “widespread contamination of water and soil”.
However, Zambia’s government downplayed the threat, saying there were no longer any serious implications for public health.
In a statement on Thursday, Human Rights Watch said the acid pollution had “killed fish, burned maize and groundnut crops, and led to the deaths of livestock, wiping out livelihoods of local farmers”.
At the time of the spill, Sino-Metals pledged to compensate the affected communities and restore the environment.
While acknowledging the $580,000 (£430,000) compensation as “a step in the right direction,” Zambia’s Vice-President Nalumango on Wednesday said the pay-out “must be guided by thorough and independent assessment”.
“If the damage to the land and livelihoods proves to be more extensive or long-lasting than initially understood, then further compensation will be necessary and it will be pursued,” said Nalumango in a meeting with Sino-Metals officials.
Environmental activists told HRW that community members in areas affected by the pollution were still complaining of headaches, coughing, diarrhoea, and other health issues that increased after the spill.
Some of those affected said they had not received the promised compensation, according to HRW.
Authorities have since imposed a fishing ban on the Kafue River and deployed the air force and speedboats to drop lime to reduce acidity levels in the affected waterways.
Zambia is among the world’s top 10 copper-producing countries and its economy is heavily reliant on the mining sector.
Additional reporting by Wycliffe Muia
More about Zambia from the BBC:
[Getty Images/BBC]
Go to BBCAfrica.com for more news from the African continent.
Royal Bank of Canada said it has proof that its former chief financial officer engaged in an intimate relationship with a colleague that she failed to disclose, citing exchanges between the two over text messages and emails.
Canada’s biggest lender filed a statement of defense and counterclaim on Friday in the wrongful dismissal lawsuit filed earlier this month by Nadine Ahn, the executive it fired in April after 25 years at the bank.
The legal filing said Ahn began a close personal relationship with a colleague, Ken Mason — an executive in the bank’s corporate treasury group — as early as 2013 and that it continued until the time of her departure.
The document offers a remarkably detailed look at how the bank alleges the relationship played out over more than a decade. It includes descriptions of how the two bankers frequently met outside work for cocktails, celebrated anniversaries, swapped romantic poetry, and called each other by pet names — “Prickly Pear” for Ahn and “KD” for Mason.
Their text messages “fantasized about a life together, such as reading in bed together,” RBC’s court filing states.
“Ms. Ahn forwarded romantic poetry to Mr. Mason, expressing that she had fallen in love with Mr. Mason when she first saw him,” according to the filing. “Ms. Ahn and Mr. Mason continued to regularly see each other outside of the office during this time period, arranging a lunch on August 18, 2017 to celebrate their ‘fourth anniversary.’”
The close relationship continued after she was promoted to CFO in 2021, according to the documents. RBC alleges that Ahn used her position within the company to orchestrate promotions and pay raises for Mason, an endeavor it says Mason referred to as “Project Ken” in a document he drew up. She also shared confidential information with Mason, the bank claims, such as a draft of a speech to be given by Chief Executive Officer Dave McKay.
The filing states that RBC doesn’t have access to their messages, “except to the extent that Ms. Ahn and Mr. Mason copied personal communications to RBC systems.”
Lawyers for Mason and Ahn didn’t reply to messages seeking comment. Ahn said in her lawsuit that she and Mason were friends but denied that they were romantic partners. Mason, who filed a separate wrongful dismissal lawsuit against RBC, also denied a romantic relationship and said the bank would have treated them differently if they had both been men.
‘I Love You Too’
The bank cites “intimate communications” exchanged between the two via text message. As one example, it states, “On March 11, 2019, Ms. Ahn messaged Mr. Mason to say, ‘I love you.’ Mr. Mason responded 15 seconds later, ‘I love you too.’”
The two allegedly used calendar invites to schedule “liquidity meetings,” which the bank said was code for going for cocktails. At one such meeting, the two scribbled notes about their drink orders and other topics such as “concert, night out, winery” on a coaster from Canoe, an upscale restaurant in Toronto’s financial district. Mason had the coaster encased in plexiglass and kept it in his office, RBC claims.
The bank said it began investigating in March after an anonymous whistleblower alleged that Ahn and Mason had been seen “hugging and kissing and exiting the elevators” at the Fairmont Royal York, a hotel that’s right beside RBC’s head office.
Bank officials “immediately commenced a thorough investigation conducted by external legal counsel,” RBC spokesperson Gillian McArdle said in an emailed statement on Friday. “We were disappointed to learn the allegations were true.”
The Globe and Mail newspaper earlier reported on RBC’s court filing.
Ahn’s lawsuit complained about the way Royal Bank handled the investigation, the speed with which she was fired after being confronted with the allegations on April 5, and the damage to her reputation when the bank put out a press release that same day.
“Contrary to the statements of claim from Ms. Ahn and Mr. Mason, the investigation showed there was an undisclosed close personal relationship, and that Ms. Ahn misused her authority as CFO to directly benefit Mr. Mason,” McArdle said. “As she was a Named Executive Officer, we had an obligation to disclose.”
Ahn’s lawsuit is seeking almost C$50 million ($37 million) in pay and damages while Mason is suing Royal Bank for more than C$20 million in pay and damages.
In its counterclaim against Ahn, RBC is seeking about C$4.5 million for “excess compensation” paid to Mason and to claw back bonuses paid to Ahn, plus other damages and costs.
RBC’s filing states that when another employee raised concerns about Mason’s pay, Ahn terminated that person’s employment without cause. The bank said that former employee “has demanded compensation from RBC for bad faith termination of his employment, because of Ms. Ahn’s conduct.”
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Flight attendants at Southwest Airlines have ratified a contract that includes pay raises totaling more than 33% over four years, as airline workers continue to benefit from the industry’s recovery since the pandemic.
The Transport Workers Union said Wednesday that members of Local 556 approved the contract by a margin of 81% to 19%. The union’s board rejected a lower offer last summer, and flight attendants voted against a second proposal in December.
Southwest has about 20,000 flight attendants. They will get raises of more than 22% on May 1 and annual increases of 3% in each of the following three years.
The union said the contract provides record gains for flight attendants and sets a standard for other flight attendants. Cabin crews at United Airlines and American Airlines, which are represented by other unions, are still negotiating contracts.
The union said the deal gives Southwest crews the shortest on-duty day and highest pay in the industry, compensation during disruptions like the Southwest meltdown in December 2022, and industry-first paid maternity and parental leave. Workers will also split $364 million in ratification bonuses, according to the union.
Dallas-based Southwest, the nation’s fourth-biggest airline, said the contract includes changes in scheduling and will help the airline’s operation.
Pilot unions at Delta, United, American and Southwest approved contracts last year that raised pay by more than one-third over several years. This week, Delta said its flight attendants and other nonunion workers will get 5% raises.
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Sixty percent of organizations are now sharing salary ranges on their job listings, according to the 2024 Compensation Best Practices Report from compensation software firm Payscale. That’s a 15% year-over-year jump. The biggest challenge for companies today, per the Seattle-based firm’s report, is compensation. Namely: Despite a tight job market and record-high inflation, workers are still gunning for better and better pay. That concern comes ahead of recruiting, retention and engagement for their employers.
“While the economy may be in flux, employee expectations have not swayed,” Payscale’s chief people officer Lexi Clarke wrote in the report, which surveyed nearly 6,000 HR company managers. “Transparent pay practices and meaningful raises are now table stakes to attract and retain top talent, but many organizations are falling behind as legislation is only accelerating.”
Half of companies lack a compensation strategy or firm messaging on the reasoning behind their pay, which is a problem, because employee engagement “hinges on workers understanding the ‘what’ and ‘why’” behind their salaries, Clarke said.
Even worse, despite the pronounced desire for better compensation, fewer organizations are planning on shelling out. (Seventy-nine percent said they plan on giving raises, against last year’s 86%.) On average, companies are planning for a 4.5% base pay increase; last year’s average was 4.8%.
Maybe companies have reason not to sweat: Last year’s rate of reported voluntary turnover was 21%, Payscale found, a 4% year-over-year drop. That’s all the evidence bosses need that it’s an employer’s market, and they can probably get away with being less generous.
In direct response to the pay-transparency boom, more and more workers are asking questions about their pay, companies told Payscale. That’s led, predictably, to some unrest.
Fourteen percent of companies say some of their workers have left because they saw an ad for a similar position offering higher pay elsewhere—and 11% saw higher paying roles listed within the company itself. Indeed, pay transparency can be a double-edged sword, but the risks of bad feelings are considerably lower if companies prioritize fairness to begin with.
The best of the rest
When it comes to the three pillars of workplace future-proofing—artificial intelligence, skills-based hiring, and flexible work—trying to stave off the inevitable is never a sustainable approach, and Payscale’s findings confirm it. (“If we were to capture how to approach 2024 in one phrase, it might be ‘cautious optimism,’” Payscale’s research team wrote.)
Each of those three pillars come back to fairness and equity, and each, when executed correctly, can make workplaces fairer places to be.
“Fair pay is the bedrock of compensation strategy, yet alarmingly, more than a quarter of employers are not proactive about correcting pay disparities,” Ruth Thomas, a pay equity strategist at Payscale, wrote in the report. “We’re seeing forward-thinking companies, on the other hand, make adjustments for external and internal pay equity, pay compression, and competitive skills—while diversifying their workforce by removing barriers to entry like degree requirements.”
Just shy of half (49%) of HR leaders are optimistic about AI in their workplace; their top concern is that AI would stand to worsen existing biases rather than mitigate them. Just 7% of HR leaders would feel completely comfortable letting AI carry out pay-related decisions.
On the skills front, over a third (34%) have removed college-degree requirements from their salaried job postings. Just 22% of firms say a college degree is a requirement for all of their salaried positions this year—a sizable improvement, and part of a rapidly building skills-first wave.
Then there’s remote work, which is considerably less of a threat than most bosses may fear. Just 11% of the employers Payscale surveyed are fully remote—the same share as last year. But there’s still lessons to be learned among that small group: The voluntary turnover rate at fully remote companies is 13%, compared to 16% at hybrid workplaces and 30% for fully in-person companies.
Boeing announced this morning that CEO Dave Calhoun would depart the company and that an executive with three decades of tenure at the $117 billion manufacturing company, Stephanie Pope, would take the lead of the commercial airlines division. As Pope takes charge of a business in crisis, investors are waiting in the wings to see what Pope’s plan is for the next 12 months—and how Boeing will hold her accountable.
Pope has a murky road ahead with regulators, investors and customers in reshaping the company’s culture and then proving to the world that people can trust it. Boeing has been beset by problems since before Calhoun even stepped into the CEO role to replace Dennis Muilenburg in 2019 after 346 people died while flying in Boeing-manufactured planes. The U.S. Department of Justice later fined Boeing $2.5 billion to resolve criminal charges of conspiracy to defraud the Federal Aviation Association’s aircraft evaluation group in January 2021. Three years on, Calhoun is leaving amid a strong lack of confidence among customers and the public after parts of Boeing-manufactured planes began blowing off midflight; last week members of the Boeing board, including Kellner, began holding meetings with major customers without Calhoun present.
“They’ve had a couple of years to figure out what’s going on with the engineering-assembly process and they haven’t diagnosed the situation yet,” said Jason Schloetzer, an associate professor at Georgetown University who has studied CEO succession and effectiveness. “They’re looking to clean house to a certain extent and get a new team in there with a fresh pair of eyes and new incentives to get this resolved—because you can’t affect change if you can’t even assess what the situation is and figure out what needs to be fixed, let alone put together a plan to fix it.”
Boeing insider likely less costly than looking outside
Going with Pope as an internal CEO pick for the airlines division is likely far less expensive than hiring someone from outside Boeing, said Maria Vu, senior director of North American compensation research at proxy advisory firm Glass Lewis. An executive from outside the company would have required Boeing to offer the exec “make-whole” payments, to compensate for equity they would leave behind with a prior employer. Plus, companies in distress often have to provide a lot of incentives to lure executives from other companies to take over a business in crisis. It’s unclear at this point if Boeing will offer Pope more than the compensation she received as chief operating officer, which was $1.2 million in salary plus an annual cash bonus of $2 million and a long-term incentive of $10 million. Once Boeing discloses Pope’s goals, investors are likely to scrutinize them for signs of how the board intends to hold Pope accountable for turning around Boeing’s culture, she said.
“There seems to be a significant risk to the business if the company’s culture is not meaningfully addressed,” said Vu. “It will be indicative of how serious the board is about changing the culture if you look at the sorts of things they’re incentivizing Ms. Pope for in her incentive programs.”
With Pope, the company is turning to a seasoned executive to turn the company around and on the one hand, “that’s great,” said Schloetzer. She is “somebody who knows the business really well and been there for a long time and is well-versed in what’s going on,” he said. On the other hand, Pope is also “a person who has been there while these issues have been playing out.”
“It’s not easy to find somebody who can come in and think through an organization like Boeing, so it also makes sense to have an internal person, but it’s not a slam dunk,” said Schloetzer. According to Schloetzer, there may also be recruiting below the C-suite and NEO level to bring in fresh perspectives to Boeing.
The management bloodletting at the top includes Stan Deal, president and CEO of Boeing’s commercial airlines division who Pope is replacing, and board chair Larry Kellner, who stepped into the role in 2019 when Calhoun crossed over from being a board member to CEO. The company has also seen outflows from other executive roles in the past few years, including Leanne Caret, president and CEO of Boeing’s defense, space and security unit, and senior vice president and treasurer David Dohnalek. The Boeing board elected Steve Mollenkopf to replace Kellner.
In January, Boeing announced that Calhoun had tapped Admiral Kirkland Donald as a special advisor to investigate Boeing’s quality management system for commercial plans. Kirkland, who is chairman of the board at $11.5 billion military shipbuilding company Huntington Ingalls, was to give Calhoun and Boeing’s aerospace safety committee a report and recommendations. His review remains ongoing, said a Boeing spokesperson in a statement to Fortune.
For Calhoun, the bulk of his more than $20 million in pay was supposed to come from his long-term incentive pay award, which had a target of $17 million. By the end of 2023, he was to have seen the 737 MAX safely return to service; realignment of engineering function; 777X twin-engine jet entry into service and delivery and production ramp-up. The award did not vest, according to the company’s disclosures.
“Generally, to incentivize an executive to be serious about something and to make material changes, especially if it’s a material risk to the business, we would expect to see some revisions to incentive programs to help address that,” said Vu.
As for Calhoun, he has at least $20 million coming his way and potentially another $45.5 million, depending on how the next CEO fares in the role. However, the Boeing board could provide him additional compensation as part of his departure or the board might decline to do so in order to avoid the additional scrutiny.
“How they classify his departure is a conversation they are likely having with him in terms of negotiation,” Vu said.
Editor’s Note: This story has been clarified to state that Stephanie Pope is the new president and CEO of Boeing commercial airplanes.
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A dispute between Morgan Stanley and Bernard Mourad, a French banker, has put the spotlight on a practice rarely challenged by leavers who often prefer to forgo deferred bonuses to avoid undue scrutiny as they start new jobs. The bank won at the appeals court level, but the fight is expected to go all the way to France’s top court.
Bloomberg News
Morgan Stanley won a court fight to overturn €1.4 million ($1.5 million) in deferred bonus payments given to a managing director who sued for the award after he quit to join one of his biggest clients.
The Paris court of appeals ruled against Bernard Mourad, saying the bank’s cash and shares incentive programs “sought to ensure his loyalty in the long term.” The judges said they were distinct from his performance compensation — covered by his salary and discretionary bonus.
As such, Morgan Stanley was allowed to make the disbursement of the deferred pay conditional on his employment at the bank at a given date “without this constituting an unjustified and disproportionate restriction on the freedom to work,” the judges ruled.
The dispute has put the spotlight on a practice rarely challenged by leavers who often prefer to forgo deferred bonuses to avoid undue scrutiny as they start new jobs. In France, similar lawsuits have cropped up in recent years against BNP Paribas SA, Edmond de Rothschild and consultancy Bain & Co.
Morgan Stanley declined to comment beyond welcoming the decision. Mourad’s attorney declined to immediately comment. Still, the outcome isn’t likely to be final as the dispute is expected to go all the way to France’s top court.
During hearings in the case, Mourad’s lawyer, Eric Manca, has argued that the deferred bonuses were explicitly linked to performance and said France’s top court prohibits requiring an employee to stay on in order to receive staggered payments for work he or she has already done.
But Morgan Stanley’s claim that Mourad tacitly accepted of the rules governing the incentive programs that held sway with judges. The court of appeals on Thursday highlighted that Mourad had received emails and logged on nearly 100 times to a website detailing conditions for the company’s deferred bonus plan.
The judges concluded that Mourad “wasn’t unaware” of the impact quitting would have. It made him “lose his rights” to amounts the court considered hadn’t been vested when he resigned — nearly €1.2 million in shares and €250,000 for another bonus.
Employment laws in France have become a regular grievance among Wall Street banks operating in the country. The issue has only become more prevalent since they started moving staff in Paris post-Brexit.
At a conference last month, the co-head of Goldman Sachs Group’s Paris office urged “more flexibility” after describing France’s labor market as “complicated.”
As part of its legal dispute with Mourad, Morgan Stanley’s team argued that his initial win in 2019 “impacts France’s entire banking sector” and “causes concern at state level.” They said the case “goes beyond the interests of Mourad and Morgan Stanley France.”
Mourad left the U.S. bank nearly a decade ago to join telecom mogul Patrick Drahi. He didn’t stay long at Altice Media and has worn many different caps since. He had a role in Emmanuel Macron’s winning presidential campaign in 2017 and did a short stint at Bank of America Merrill Lynch in Paris.
JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon and his family sold $150 million worth of the bank’s stock, following through on last year’s announcement that he would begin selling shares for the first time since taking the helm 18 years ago.
Dimon and his family sold about 822,000 shares in a series of transactions on Thursday, according to a U.S. Securities and Exchange Commission filing. The stock, which has outperformed the broader market and peers during his tenure, is trading at a record high.
“Mr. Dimon continues to believe the company’s prospects are very strong and his stake in the company will remain very significant,” the company said in an October filing about his planned sales. A representative for the firm declined further comment on Friday.
The October announcement said Dimon planned to sell one million shares, subject to terms of a stock-trading plan. Along with his family, he continues to hold about 7.7 million shares after Thursday’s sales.
When he took over as CEO, the stock was trading for about $40. He sold the shares on Thursday for nearly $183 a piece, as the stock had rallied roughly 30% since the October announcement that he planned to offload shares. Shares gained 0.5% on Friday.
On Wall Street, analysts are decisively bullish on JPMorgan shares’ prospects. Two dozen hold buy-equivalent recommendations, giving it the highest consensus rating among its handful of biggest banking peers. The return potential implied by their price targets is more than 4% over the next twelve months.
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In 2021, the chief executive officers at large and regional U.S. banks got a median pay raise of 21.5%. The following year, bank CEO pay climbed by 7%.
It’s still too early to say what the industrywide trend was last year, when banks navigated a 10-week-long crisis. Many lenders, including Citigroup and Goldman Sachs, have yet to file the relevant disclosures on executive compensation.
But in recent weeks, five large U.S. banks have said how much money their CEOs were paid last year. Their disclosures shed early light on how the compensation committees of bank boards made pay decisions at the end of a tumultuous year.
What follows is a look at how much the CEOs of JPMorgan Chase, Bank of America, Wells Fargo, Morgan Stanley and Capital One Financial were paid in 2023, based on the banks’ own reporting and an analysis by the consulting firm Compensation Advisory Partners.
The CEOs who got the biggest raises are listed first.
James Gorman engineered a transformation of Morgan Stanley with wealth management at its core following its near collapse during the 2008 financial crisis. Gorman, 65, was succeeded as CEO earlier this month by Ted Pick.
Yuki Iwamura/Photographer: Yuki Iwamura/Bloom
Morgan Stanley increased James Gorman’s compensation 17% for his final year as chief executive officer, boosting his pay to $37 million.
Three-fourths of Gorman’s bonus will be paid in deferred stock over three years, the New York-based firm said in a regulatory filing Friday. On top of his $1.5 million base salary, he received a cash bonus of just under $9 million.
During his time as CEO and in 2023, Gorman “reshaped the firm into a stronger and more balanced institution positioned for long-term growth,” the bank said in the filing. “In addition, Mr. Gorman successfully accomplished an orderly, multiyear CEO succession-planning process.”
Gorman, 65, was succeeded as CEO earlier this month by Ted Pick. During his 14 years running the firm, Gorman engineered a transformation of Morgan Stanley with wealth management at its core following the firm’s near collapse during the 2008 financial crisis. Gorman is now the bank’s executive chairman.
In a rarity for Wall Street, the two executives who missed out on the CEO job agreed to remain at Morgan Stanley, with co-President Andy Saperstein gaining oversight of asset management in addition to his role leading wealth management, and Dan Simkowitz replacing Pick as co-president leading the investment-banking and trading division. In October, Morgan Stanley granted special bonuses worth $20 million each to Pick and his two deputies.
In Friday’s filing, Morgan Stanley said its board’s compensation committee approved, retroactive to Jan. 1, a new base salary of $1.5 million for Pick — a move made to bring his pay in line with Gorman’s base salary when he was CEO. Pick previously received a base salary of $1 million a year.
Gorman’s 2023 pay bump follows a cut the previous year. His compensation was reduced by 10% for 2022, a year in which profit tumbled at Morgan Stanley and its shares sank more than 13%. Last year, the stock rose 9.7% even as net income slumped 18% to $9.09 billion. Revenue, however, rose slightly to $54.1 billion.
The pay increase for Gorman comes after a bump for the head of JPMorgan Chase. On Thursday, the largest U.S. bank announced that it raised CEO Jamie Dimon’s pay 4.3% to $36 million for 2023, a year in which his company notched the highest profit in the history of U.S. banking.
“Our products are undifferentiated, generally speaking. They’re good products, but they’re undifferentiated,” First Republic Founder James Herbert II said in a video for his induction into the Bay Area Business Hall of Fame. “What’s differentiated is the people and their passion, their caring for clients and the service they deliver,”
Jamey Stillings
James Herbert II spent four decades building one of the nation’s 20 largest banks. Then, in the span of just seven and a half weeks, the 78-year-old founder saw it all come crashing down.
First Republic Bank, which Herbert founded in 1985, collapsed on May 1 after being toppled by a deposit run. As the San Francisco bank’s executive chairman, Herbert was involved in desperate efforts to arrange a private-sector solution. But after those efforts failed, he was left to watch as the Federal Deposit Insurance Corp. seized the bank and sold it to JPMorgan Chase.
Herbert is taking the bank’s failure hard, according to his friend Frank Fahrenkopf Jr., a longtime First Republic board member. In recent days, Herbert has been staying with family members in Jackson Hole, Wyoming — sitting in the backyard, looking at the Grand Tetons and trying to forget what went wrong, Fahrenkopf said in an interview.
“The bank was his life. It’s a tragedy for him,” Fahrenkopf said. “I call him every day to make sure he’s doing all right.”
The story of First Republic’s demise has several elements. It’s about the impact of fast-rising interest rates on a large mortgage portfolio that quickly lost value, as well as about the fears sparked by the March 10 failure of Silicon Valley Bank.
But it’s also a deeply personal story. The son of a banker, Herbert built his own large banking franchise before agreeing to its $1.8 billion sale. He later regained control, then held on to the CEO job past age 75, all while collecting pay packages that rivaled the CEOs of larger banks. Finally, approximately a year after he ceded day-to-day control, he watched it all crumble.
Herbert declined to comment for this story. People who know him said that he built First Republic around a distinct business philosophy, which focused on providing exceptional service.
The bank’s branches were known for offering fresh-baked chocolate chip cookies and wood-handled umbrellas to its well-to-do clients. During the pandemic, when some big banks raised their hourly minimum wages above $20, First Republic hit $30 per hour.
“The bank reflected Jim’s view that customer service could play a central role in clients’ lives,” said Tim Coffey, an analyst at Janney Montgomery Scott. “And it worked until interest rates went parabolic.”
‘Exceptional service’
Herbert’s father, also named James, was a longtime banker in Ohio who eventually served as president of the Ohio Bankers Association. When his son graduated from college in the mid-1960s, he offered some career advice: Don’t become a banker.
The younger Herbert had other ideas, though. One of his earliest jobs was at Chase Manhattan Bank, a predecessor to the industry behemoth that swooped in this week to purchase First Republic.
During the early 1980s, Herbert and a partner, Roger Walther, bought two California-based thrifts and formed a holding company called San Francisco Bancorp. After selling that firm in 1984, they opened First Republic Thrift & Loan the following year.
First Republic took savings deposits and offered jumbo mortgages, largely to wealthy consumers. In 1986, when First Republic held an initial public offering, it had a total enterprise value of $23.3 million. But the bank was well positioned for growth.
There were lots of affluent households in the Bay Area, where First Republic was based, as the region rode the tech revolution. First Republic later expanded to other well-off coastal cities, including New York, Boston, Los Angeles, San Diego and Palm Beach, Florida, and grew its wealth management business.
“The real story of First Republic is exceptional service — exceptional service delivered by exceptional people, all the time, every day, to every client,” Herbert said in a video for his induction into the Bay Area Business Hall of Fame.
“We have products, but all banks have products. Our products are undifferentiated, generally speaking. They’re good products, but they’re undifferentiated. What’s differentiated is the people and their passion, their caring for clients and the service they deliver,” he added.
During the mortgage boom of the early 2000s, Herbert got an offer to sell First Republic to Merrill Lynch. He was initially reluctant. But the deal he struck with Merrill in 2007 allowed the bank to keep its brand, its management team, its offices, its employees and substantial authority to make decisions.
First Republic grew its assets from $22 billion in 2010 to $212.6 billion at the end of last year.
Eric Thayer/Bloomberg
Then came the 2008 financial crisis. Merrill Lynch, on the verge of failing, was acquired by Bank of America, which had a competing private bank and wasn’t a good fit for First Republic. In 2009, Herbert led a group that raised $2 billion to buy back the bank. And the following year, in late December, First Republic went public for the second time. The spinoff was lucrative for Herbert, whose compensation in 2010 totaled $36.3 million, most of it from stock option awards.
Growth continued at a rapid and steady pace, as a sustained period of low interest rates drove heavy mortgage volumes. First Republic went from $22 billion of assets three months prior to its second IPO to $55 billion of assets in the fall of 2015. And Herbert benefited handsomely.
His annual compensation fluctuated, but there were years where it rivaled the sums paid to the CEOs of very large banks. In 2012, Herbert’s total compensation was $15.2 million, mostly in stock awards.
And in 2021, Herbert was paid $17.8 million, again mostly in stock awards, according to the bank’s disclosures. Among U.S. commercial banks, only the CEOs of JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and PNC Financial Services Group collected more money that year.
As of March 2022, Herbert owned more than 800,000 shares of the company’s common stock, representing 0.4% of the total shares available, according to the bank’s proxy statement last year.
‘A silver platter’
During his final decade at the helm of First Republic, Herbert had a good deal of stature in the industry. In 2018, the Federal Reserve Bank of San Francisco appointed him to the Federal Advisory Council, which typically meets four times per year with the Fed’s Board of Governors to dismiss economic and banking issues.
At First Republic, questions were arising about who would succeed Herbert. Initially, the bank’s only CEO in its nearly 40 years of existence was set to remain chairman and chief executive through 2017, and to stick around as executive chairman through 2021.
But that deal was reworked, and then it was reworked at least three more times. In 2021, Herbert, then 77, was set to remain CEO through the end of last year, and Hafize Gaye Erkan, the bank’s then-president, was named co-CEO, setting her up as Herbert’s heir apparent.
But in an unexpected move, Erkan resigned from her post on Dec. 31, 2021, just two weeks after the company announced that Herbert would soon begin a medical leave of absence to address a coronary health issue. In March 2022, then-Chief Financial Officer Michael Roffler, who had been appointed interim CEO, was named to the post permanently and joined the bank’s board of directors.
Herbert, meanwhile, became the executive chairman, a role that allowed him to stay active “in the development of the bank’s overall strategy, preservation of its unique culture and maintenance of key relationships with clients and shareholders,” according to the bank’s 2022 proxy statement.
First Republic’s loan growth accelerated over the last three years, with total loans increasing by 48% between the end of 2020 and the end of 2022.
The bank was his life. It’s a tragedy for him.
Frank Fahrenkopf Jr., a longtime First Republic board member, on the bank’s founder, James Herbert II
Last year was an especially good year. The bank reported record-setting loan growth, loan-origination volume, revenue and earnings per share. Growth continued even as mortgage lending volumes fell industrywide, with the bank’s residential real estate book swelling by 28% between the first quarter and the fourth quarter.
At the end of 2022, First Republic’s assets were $212.6 billion — a nearly tenfold increase in the 12 years since Herbert bought back the bank.
In a January 2023 call with analysts, Herbert said the industry’s slowdown in mortgage lending presented “an extraordinary opportunity” for First Republic to take market share.
“Moments like this are very special,” Herbert said. “The volume of demand is down, we all know that … but the disruption that’s going on in the mortgage market … is just handing us [opportunity] on a silver platter.”
First Republic’s focus on mortgage lending, including its push for additional growth as the Federal Reserve began raising interest rates, ultimately contributed to its undoing, said David Chiaverini, a banking analyst at Wedbush Securities.
“The way that they were winning against the competition is by undercutting on price,” Chiaverini said this week in an interview. “They were offering what were essentially long-duration jumbo mortgages at an attractively low rate, which is great for customers and leads to fast growth.”
As other lenders scaled back their mortgage originations amid rising interest rates, First Republic faced questions about its ability to attract deposits while continuing to extend new loans. Herbert argued that First Republic’s reputation as an experienced and high-value lender would enable it to weather a potential downturn.
“Most of our business is with existing clients and their direct referrals,” he told an analyst during First Republic’s July 2022 earnings call. “When their friends are having trouble getting something done, they say, ‘You ought to try First Republic.’”
The bank’s push-forward mentality led to a liquidity crunch, Chiaverini said. After rates rose, the bank faced the prospect of having to sell mortgages at below par value to raise capital, since the market value of those loans had fallen, he said.
“That’s why it ended up failing. No investor wanted to recapitalize First Republic, just like they didn’t want to recapitalize Silicon Valley Bank,” Chiaverini said. “They viewed it as throwing good money after bad, given how deep of a hole their balance sheet was in.”
‘Demise can happen very quickly’
During the first three months of this year, Herbert was among a handful of First Republic executives who sold millions of dollars of First Republic stock, according to regulatory filings. The shares were priced on average in the $130-per-share range, and Herbert’s stock sales totaled $4.5 million, The Wall Street Journal reported in March.
The sales were in line with Herbert’s annual estate planning and philanthropic donations, a spokesperson for Herbert told The Wall Street Journal.
And they represented about 5% of Herbert’s holdings, according to a source familiar with the situation. “It’s important that people have that perspective,” this source said. “He held onto a vast majority of his shares.”
When Silicon Valley Bank failed, First Republic was particularly vulnerable to the fallout. Both banks were based in the Bay Area, and both had upscale clienteles.
“I’ve spent a lot of nights not sleeping thinking about this: What could we have done to have avoided this?” said Fahrenkopf, the longtime First Republic board member. “And I came to the conclusion: If our bank was headquartered in Reno, Nevada, rather than San Francisco, so close to Silicon Valley Bank, this probably wouldn’t have happened.”
One First Republic customer who withdrew funds from a branch in San Francisco on Saturday, March 11 — one day after Silicon Valley Bank was seized by the government — described an anxious scene, with many customers still waiting to be served at 2 p.m., after the branch was scheduled to close.
A First Republic employee climbed onto a file cabinet to tell the assembled customers that their requests would be fulfilled, but also expressed uncertainty about whether the bank would survive the weekend, according to the customer, who spoke on condition of anonymity.
The next day, another regional bank, Signature Bank in New York City, also failed, as fear spread.
By the end of March, First Republic’s deposits, which totaled $176.4 billion at the end of last year, had fallen by more than $100 billion, not counting the $30 billion that 11 big banks deposited at the bank on March 16 in an effort to stabilize the situation.
“Certainly the outflow of $100 billion in a three-week period is a major factor, and … before Silicon Valley, not something that anyone had really anticipated,” said the source who spoke about Herbert’s stock sales.
During First Republic’s final weeks, company executives mounted an all-hands-on-deck effort to find a private-sector solution that would keep the bank out of government receivership — and avoid wiping out shareholders.
As executive chairman, Herbert was no longer required to be involved in the bank’s day-to-day operations. But the crisis created an intense level of pressure that was hard for him to ignore, and his involvement increased. Still, the efforts failed, and First Republic became the second largest bank failure in U.S. history.
The level of complexity involved made a private-sector solution hard to achieve, said the source familiar with the bank’s situation.
The demise of three regional banks in the last two months is a reminder of how rapidly bank runs can happen. “As soon as an institution loses the confidence of its customers, demise can happen very quickly,” said Coffey of Janney Montgomery Scott.
But Fahrenkopf said that he’s advised Herbert not to dwell on the past. “It doesn’t do any good to look behind,” Fahrenkopf said. “We can look forward. Don’t fret too much.”
In recent years, bankers were often able to receive their full bonus by making more loans to old and new clients.
But this year, those who are hoping for a bigger payday will have to hone another skill: bringing in those clients’ deposits.
The shift is another sign of how banks are battling for deposits, thanks to the Federal Reserve raising interest rates sharply and putting an end to the days when the industry could stand by without paying much, or anything, to their depositors.
If deposit growth previously made up 10% of a loan officer’s bonus total, that figure is now at least 20%, said Mike Blanchard, CEO of the Atlanta-based Blanchard Consulting Group.
Oana – stock.adobe.com
With deposits now heading out the door at many banks, industry executives are revising their employees’ bonus targets. How well bankers do at bringing in deposits, as well as holding onto existing ones, is suddenly taking center stage.
Alan Johnson of Johnson Associates, which advises megabanks, regional banks and investment firms on compensation, noted that banks want the cheapest possible source of funds.
“That’s true for a giant bank or a community bank,” he said, adding that incentivizing deposit-gathering can help banks in this regard.
The picture has changed quickly from last year, when banks were awash in deposits that arrived earlier in the pandemic, and there was “more liquidity than anyone could possibly imagine,” Johnson said.
Loans remain a top priority for bankers’ incentive plans, since interest and fees from borrowers are banks’ primary way of making money, particularly at smaller institutions.
Deposit outflows concern banks because they increase the risk of a shortfall in the amount of liquidity needed to fund the loan volumes they are targeting.
Deposits have long been part of many bankers’ incentive plans, but they took a backseat for much of the pandemic as banks fought for any loan growth they could get.
Now, the deposits that banks use to fund loans are making up a larger share of bankers’ bonus targets, said Mike Blanchard, CEO of the Atlanta-based Blanchard Consulting Group, who focuses on community banks.
If deposit growth previously made up 10% of a loan officer’s bonus total, that figure is now at least 20%, Blanchard said. For retail branch managers, the already-heavy emphasis on deposits has escalated. And bank boards are also basing more of senior executives’ bonuses on their ability to bring in deposits.
“The focus this year is almost 100% on good, core deposit growth,” Blanchard said.
Bankers have been talking about the shift in recent weeks.
At the top of Ameris Bancorp’s priorities this year is “deposits, deposits, deposits,” CEO Palmer Proctor told analysts on an earnings call last month.
“All our incentive plans have been adjusted to reflect that across the board in a more intense level,” Proctor said, though he noted focusing on deposits is “nothing new” for the Atlanta-based bank.
At Dime Community Bancshares, CEO Kevin O’Connor said on a recent earnings call that incentive compensation plans “from top to bottom are designed on prioritizing” growth in demand deposits. Those funds do not pay interest, which helps to keep the Hauppauge, New York-based bank’s interest expenses down.
PacWest Bancorp is also tweaking its incentive-pay programs to prioritize deposits. Additionally, the Beverly Hills, California-based bank is making sure that the loans it makes generally come with a deposit relationship, executives said last month.
PacWest has always had teams focused specifically on deposits, but now it’s “not just one group,” said Chief Operating Officer Mark Yung. “It’s everybody, from the lenders to the top of the house all the way to the front line.”
Banks are not seeking just any deposits. They particularly want core deposits — the main deposit accounts for consumers and the accounts for businesses’ operational funds, which they use for payroll and other key expenses.
Those deposits are seen as far more “sticky” than non-operational deposits, which are a bigger flight risk as customers chase higher-yielding options elsewhere.
Those better-paying options include Treasury securities and higher rates on deposits — sometimes at online banks, but also at brick-and-mortar banks with higher rate specials posted on their windows.
Karen Butcher, managing director at the compensation consulting firm Pearl Meyer, said that banks are using metrics such as their clients’ average monthly balances to help judge employees’ performance.
“Retention is really as important as the acquisition,” Butcher said.
The focus on deposits is likely not new to bankers who specialize in commercial and industrial loans, the credit that banks extend to businesses for general purposes or specific projects. But those who focus on commercial real estate loans are increasingly seeing some sort of deposit-related requirement added to their incentive-pay plans, according to Butcher.
“I think we’re going to see more of looking to those lenders to say, ‘How can we get some deposits from your customers?’ whereas in the past that hasn’t been a focus,” Butcher said.
Looming over compensation decisions, however, is one of the biggest sales scandals in banking history.
One lesson from Wells Fargo’s fake-accounts scandal is that bank management should establish targets in a realistic way that don’t encourage “malfeasance,” said Blanchard, the Atlanta-based community bank consultant.
Wells continues to operate under an unprecedented asset cap after aggressive sales targets set by prior management prompted branch staffers to open unauthorized customer accounts.
Bankers should always have a board committee or similar structures to review incentive plans for anything that could put the bank at risk, Blanchard warned.
“They need to make sure they have good corporate governance, because you’ve got to be careful,” he said.
Bank of America CEO Brian Moynihan had his total compensation for last year fall by $2 million, according to a securities filing from the bank.
Diedra Laird
dlaird@charlotteobserver.com
Bank of America CEO Brian Moynihan’s total compensation decreased by 6% for 2022, according to a recent securities filing from the Charlotte-based bank.
The bank’s board approved $30 million in total compensation for Moynihan last year, compared to $32 million in 2021. The filing didn’t provide a specific reason for the decrease.
In 2021, Moynihan’s compensation increased by 31% as Bank of America reaped record profits and the stock price soared. But a worsening economic outlook helped drag the bank’s stock back down last year — share prices fell 26% in 2022.
That decrease “reflect(ed) weakened investor sentiment given geopolitical tensions and recessionary fears,” the filing said.
On Monday morning, Bank of America’s stock was trading at $36.05.
Despite the pay dip, the board said in the filing that it acknowledged both the bank’s “continued success” last year and Moynihan’s leadership, particularly in a period of economic uncertainty.
Moynihan’s pay package for 2022 includes a $1.5 million base salary and $28.5 million in stock awards. Similar to prior years, he didn’t receive a cash bonus, the filing said.
Moynihan’s compensation over the years
Moynihan’s compensation, as authorized by the Bank of America board, has doubled since he took over as CEO in 2010. As some stock bonuses depend on meeting performance goals over multiple years, Moynihan’s actual take-home may differ from what the board awarded him.
Bank of America’s stock price has increased significantly during Moynihan’s tenure. On Dec. 31, 2009, it was trading at $15.06 a share.
The bank is one of Charlotte’s largest employers, with more than 18,000 workers in the region. It’s also the second-largest bank in the country, with $2.41 trillion in assets.
This story was originally published February 6, 2023 1:04 PM.
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Hannah Lang covers banking, finance and economic equity for The Charlotte Observer. Her work has appeared in The Wall Street Journal, the Triangle Business Journal and the Greensboro News & Record. She studied business journalism at the University of North Carolina at Chapel Hill and grew up in the same town as her alma mater.
Bank of America CEO Brian Moynihan’s total compensation declined 6.3% to $30 million for his work in 2022, a year in which profit tumbled and the shares sank.
The board granted Moynihan $1.5 million in salary and $28.5 million in stock-based incentive awards, the Charlotte, North Carolina-based lender said Friday in a filing. A year ago, Moynihan’s compensation was boosted 31% to $32 million as the firm set a record for profitability.
Brian Moynihan.
Simon Dawson/Bloomberg
The pay package follows an industrywide focus on compensation and other expenses amid a slump in dealmaking and concern about the impact a potential recession would have on Wall Street revenue.
Bank of America is seeking to reward its best employees while keeping a lid on costs. The firm has already been forced to scale back on hiring plans, even as it added headcount in the fourth quarter. Net income in 2022 fell to $27.5 billion from a record $32 billion a year earlier.
This year, the firm is awarding a pool of restricted stock to employees who earn up to $500,000 to retain workers. It is the sixth year the bank has paid such awards, which now total more than $4 billion.
The bank’s shares plunged almost 26% in 2022. The stock has rebounded about 10% since then, to $36.43 at the close of regular trading in New York Friday. Moynihan, 63, was promoted to CEO in 2010 in the wake of the global financial crisis, and has steered the lender through the pandemic. He has signaled his interest in staying on for years to come.
Other U.S. finance companies have turned to layoffs, with executives touting the need to cut costs in a challenging economic environment. That’s caused some bank leaders to take a hit to their pay.
Goldman Sachs Group CEO David Solomon’s compensation for 2022 fell 30% to $25 million, while Morgan Stanley’s James Gorman got a 10% pay cut to $31.5 million. In contrast, JPMorgan Chase held Jamie Dimon’s pay steady at $34.5 million.
It’s the most wonderful time of the year: corporate budget season. Or in some cases, budget re-adjustment season.
It’s the time when companies start to get realistic about what’s ahead for the coming year, particularly during the first quarter. And while that’s already playing out for some companies in the form of layoffs and hiring freezes, there is some good news for some employees heading into 2023.
Next year’s raises should be even higher than 2022 payouts, according to WTW’s annual salary budget planning report, based on survey responses from 1,550 U.S. organizations fielded in October. Despite the threat of an impending economic downturn, companies estimate they’ll be increasing their average workers’ salary 4.6% next year, up from the 4.2% the average worker received in 2022.
“As inflation continues to rise and the threat of an economic downturn looms, companies are using a range of measures to support their staff during this time,” Hatti Johansson, research director of reward data intelligence at WTW, said in a statement.
Boosting salary budgets is proving especially critical as companies continue to struggle to attract and retain employees. Three-quarters of organizations admitted to hiring and staffing issues—a number that’s nearly tripled since 2020. The continued tight labor market is the primary reason about 68% of companies opted to increase salary budgets.
But that pressure to pay well is a balancing act. About seven in 10 companies said they spent more than they’d planned to on salary increases and compensation adjustments over the last year. In order to fund pay increases, one in five are planning to raise prices on their products while 12% expect they will need to restructure and reduce staff headcounts.
And yet, despite the historic pay increases that organizations have doled out in recent years, compensation has not kept pace with inflation. National wage growth during the third quarter of 2022 increased 4.7% year over year, according to the PayScale Index. Yet, as of the end of September, real wages—which factor in the effect of inflation—are actually down 3% year over year.
For organizations struggling to make the math work if workers keep playing musical chairs with jobs and employers, WTW’s Lesli Jennings recommends focusing on the overall employee experience, not just providing pay increases. Two-thirds of companies surveyed have already provided workers with more flexibility and 61% have sharpened their focus on diversity, equity, and inclusion policies and programs.
“By focusing on health and wellness benefits, workplace flexibility, careers and DEI, organizations can position themselves as the employer of choice for their current and prospective employees,” Jennings says.
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