NEW YORK (Reuters) - JPMorgan Chase & Co (JPM.N) is telling employees this week about their 2013 bonuses, and most workers are not getting pay increases for the year thanks to the bank’s massive legal bills, a person familiar with the matter said.
Overall compensation per employee was roughly flat with 2012, just as managers had warned employees in November, said the person who was not authorized to speak publicly. While some individuals are getting more money, their payouts have come at the expense of others.
Pay increases have been muted across much of the banking sector in the aftermath of the financial crisis, but 2013 was especially tough at JPMorgan as profits declined because of the cost to settle government and private claims against the bank.
The bank announced about $20 billion of settlements in 2013 and recorded firm wide legal expenses of $11.1 billion, up from $5 billion in 2012. The additional legal expenses were responsible for all of the company’s 9 percent increase in non-interest expenses. Net income in 2013 was $17.9 billion, down 16 percent from 2012.
Company-wide compensation expense was $30.8 billion for the year, up a fraction of one percent from 2012. At the same time, JPMorgan reduced headcount by more than 7,500 people to 251,196, with the result that compensation expense per employee rose nearly 4 percent to $122,653, according to data disclosed by the company last week.
Most of JPMorgan’ job cuts were from positions handling mortgage loans. Some tellers in bank branches were also replaced with financial advisors selling investment products.
In the company’s Corporate & Investment Bank, where its deal-makers and traders work, total compensation expense declined 4 percent and employment remained flat. Average compensation expense per employee in the division was $207,368, down about $10,000 from a year earlier.
Reporting by David Henry in New York; Editing by David Gregorio