Banks Doing The Compensation Sidestep Shuffle

Following the pitchfork-type outrage from the all corners of the U.S. over the $165 million bonuses doled out at American International Group, Inc. (AIG) over the past weekend, both Citigroup (C) and Morgan Stanley (MS), which received government aid under the Troubled Asset Relief Program (TARP), as well as other financial institutions are discussing ways to sidestep tough new federal caps on compensation in order to increase base salaries for some executives and other top-producing employees.

In February 2009, President Obama set pay for top executives at companies which received funds at cap of $500,000 per annum. While bonuses form a large part of compensation packages on Wall Street, the new rule might not apply to lower-ranking yet still highly lucrative traders and investment bankers - but it appears approximately 25 executives could be subject to bonus limits at Citigroup.

However, we would point out that JPMorgan Chase & Co. (JPM) appears to be bucking the raising base pay trend, as this topic does not seem to be on the docket presently.

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