2012's most overpaid bank CEO is . . .

Capital One's Richard Fairbank landed atop a new Bloomberg ranking that considered both compensation and an institution's performance.

By Aimee Picchi May 30, 2013 1:16PM

CEO © Roy McMahon (Corbis)After the financial crisis of 2008, some lawmakers and Americans expressed outrage at the huge paychecks lavished on bank executives. That led to a brief period of restraint as some chief execs went without bonuses. 


That era is apparently over, according to a new study from Bloomberg that ranked the 10 most overpaid bank CEOs in 2012. And topping the list was Capital One's (COF) Richard Fairbank, who earned $17.5 million last year. He beat out Goldman Sachs' (GS) Lloyd Blankfein, even though Blankfein earned $26 million last year.


Here's why: To come up with its rankings, the publication considered several measures of bank performance under the CEO and gave each bank a rank. Then it subtracted the CEO's pay rank from the bank's performance rank. The CEOs with the biggest gap between the two were deemed the most overcompensated. 


By that measure, Fairbank showed the widest difference between his pay and his company's average ranking. While Capital One's $313 billion in assets make it the 12th-biggest bank, Fairbank was the third-highest-paid CEO. 


Even though Fairbank took a pay cut of almost 9% last year, he was still overpaid, Bloomberg says. A spokeswoman for Capital One -- known for its ads featuring actor Alec Baldwin and its huge number of customer complaints -- told Bloomberg Fairbank has received no salary for 16 years and his compensation is based on stock and tied to the bank's performance. 


The second-most-overpaid bank CEO, Goldman's Blankfein, is a symbol to many of the banking system's excesses. As 2012's most highly compensated bank leader, Blankfein's $26 million far outpaced runner-up John Stumpf, who heads Wells Fargo (WFC) and made a mere $19.3 million last year.


In 2012, Goldman gave Blankfein a 73.3% pay hike, the biggest jump of the bank leaders on Bloomberg's list. The bank's return on equity placed it at No. 11, while the stock return was the fourth highest. Given the disparity between those indicators and Blankfein's pay, he earned the distinction of being the second-most-overpaid chief, Bloomberg says. 


Goldman spokesman David Wells said the bank believes its framework for executive compensation is "a more reliable and thoughtful reflection of how best to compensate senior leaders than the methodology used for this exercise," according to the report. 


Compensation for the top 20 bank CEOs rose 7.7% last year, the story says. That's a sizable boost when many Americans are facing meager raises of 1%, if they have jobs at all.


Follow Aimee Picchi on Twitter at @aimeepicchi. 


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7Comments
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Little known info about Blankfein, he shared the same living quarters, and graduated from Harvard, the same year as none other, than our federal reserve chairman, Bernanke.  The country would be much better off, without these two overpaid buffoons.  
May 30, 2013 4:05PM
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Just a part of the entire degradation process. Rampant greed and corruption; vast majority of the wealth held by the very small minority. Politicians doing the bidding of the wealthy. All Empires eventually fall; we are smack in the middle of  this very process.
May 30, 2013 3:15PM
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I can name one of the most overpaid and demented politicians.
May 30, 2013 8:01PM
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whenever I get something from capital one,i stuff the prepaid postage envelope with all my other junk mail and mail it back to them.but don't forget to scribble out the bar code on the bottom of the envelope otherwise they know who sent it.i do this so they have to pay extra for mailing that to me.
May 30, 2013 7:22PM
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Good thing I have enough sense to shred everything that comes in the US Postal Mail from Capital One!
May 30, 2013 11:17PM
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The cause of this over payment is the share holders and Board of Directors of the bank.  The shareholders don't seem to care and the Board of Directors are so  overpaid them selves that they don't understand why every one don't make as much as they do. 

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