JPMorgan Chase and Citigroup are mulling reductions to fixed pay for their senior executives in the UK, reported Bloomberg citing sources. This follows the recent modifications to local remuneration regulations. JPMorgan is expected to reach a decision in the coming weeks on whether to cut or entirely remove fixed allowances for employees deemed “material risk takers,” a category that includes senior traders, investment bankers, and compliance executives, according to a person privy to the development. ...

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Core Insights - CEO pay at top American companies reached a median of $16.8 million in 2024, marking a 7.4% increase from the previous year, while average worker pay rose by less than 4%, insufficient to keep pace with inflation [1][2] Executive Compensation Structure - Executive pay is typically structured with multiple components, including performance-based pay linked to company stock performance, base salary, bonuses, stock awards, stock options, and perks [4][7] - Compensation decisions are made by a board compensation committee, often with external consultant support and some input from shareholders [4] Historical Trends - There is a significant and widening gap between executive pay and worker pay, with CEO-to-worker compensation ratios increasing from 21-to-1 in 1965 to 290-to-1 in 2023 [7] - From 1978 to 2023, CEO pay increased by 1,085%, while typical worker compensation only rose by 24% [7] Comparative Metrics - CEO compensation has outpaced that of other high earners, such as senior lawyers and investment bankers, indicating a unique trend where CEO pay has grown faster than the top 0.1% of wage earners [8][9] - The compensation structures for CEOs have increasingly been tied to equity grants and performance shares, allowing for exponential growth when stock prices rise, unlike other high-income professionals whose earnings have tracked broader economic trends [9]