Bloomberg reports that some bank chief risk officers are making millions in compensation.
Oh to manage risk at a bank. According to a Bloomberg report chief risk officers at banks are making millions in compensation. Bank of America, Citigroup, AIG and UBS are among the companies “raising the profile of risk executives,” Bloomberg said. For instance, the salary of BofA’s Chief Risk Officer, Bruce Thompson, was $11.4mn in 2010.
This would certainly raise the ire of their comparatively underpaid counterparts in corporate treasury who have been working within the world of “do more with less,” generally speaking, for several years now. And who probably have been longer and more attuned to risk than their bank brethren. But it’s not for a lack of trying. However, one of the big hurdles in corporate treasurers’ attempts to up their own profiles – and comp – is the tricky proposition of measuring performance.
This was a theme at a meeting in March of the NeuGroup’s Treasury Group of Thirty. Just how do treasurers seeking to lead a value-added treasury function identify performance measures that can measure the function’s value-add objectively? The answer remains an elusive one. Of the performance measures treasurers cited as useful – including hedge performance against a benchmark – sadly, none came close to providing an aggregate, objective measure of treasury’s value-add. When it comes to pay, the rule of thumb is to tie performance-based compensation to broader business performance. But if this is the case, many treasurers are left wonder why they should bother coming up with a treasury value-add metric at all.
Further, some treasurers also fear that any attempt to measure the marginal value-add of the treasury function will leave it open to accusations by managers that treasury simply managed to change the value allocation at their expense.
Still, it’s nice to look at the pay of bank chief risk officers and dream of bigger paydays down the road. And perhaps it will as some highly skilled corporate risk managers flee corporate and head over to banks. This could result in more dollars spent on the treasury function as a whole, which will make it more of an enticing place to work (and making staffing less of a challenge, too).