Getting paid well in finance can often come down to timing. Bonuses and deferred compensation are weighted heavily and often vary significantly over long stretches due to factors unrelated to personal performance. Want to avoid becoming a slave to your bonus? Work at a regulator like FINRA that pays out big salaries and bonuses that bend but don’t break.
While authorized by Congress, the Financial Industry Regulatory Authority is a private non-profit that is not part of the government – a key distinction that enables FINRA, which oversees broker-dealers and exchange markets that pay it membership fees, to have more autonomy over compensation than other regulators. The end result: the average FINRA employee took home roughly $193k in pay in 2017, with several of its top execs netting over seven-figures, according to its latest annual report.
CEO Robert Cook is earning a $1 million salary for 2018 and was paid $1.35 million in incentivized comp in March for his work the previous year. That $2.35 million total will likely increase once deferrals and other compensation like multi-year retention payments are accounted for. Those payments netted Cook an additional $440k last year. As a point of reference, Federal Reserve Chair Janet Yellen makes just over $200k.
Meanwhile, FINRA CFO Todd Diganci has a $600k salary; CIO Steven Randich and chief legal officer Robert Colby each make $500k; and six executive vice presidents earn base salaries of between $365k and $450k.
Cook announced a freeze on salary increases in 2017 that continued into 2018 following a 6% drop in revenue and another round of public scrutiny over executive pay. (FINRA was heavily criticized in 2011 after acknowledging paying its now-former public relations head over $1 million the previous year). Compensation costs dropped by 7% in 2017, but there were no wild swings in incentivized comp like you’d see at a bank. And no executive took a salary cut.
All top execs other than Cook earned a bonus that fell within 12% of what they made the year previous. (Cook declined his bonus for 2016). While incentivized comp was down, top executives still took home bonuses that neared 100% of their base salaries, with deferred compensation and other benefits adding another $100k to $270k. Despite the recent changes, around two-thirds of FINRA expenses are still earmarked for employee compensation and benefits – a number that dwarfs comp ratios at most every financial institution.
The reason is that FINRA uses investment management and securities firms as benchmarks for its own pay policies. The organization said in its annual report that the philosophy is critical to recruitment and employee retention. Clearly, the policy is working. FINRA's ability to retain top-level talent is eye-opening, particularly in light of the current salary freeze.
Diganci has been with the organization since 1995, before it was even known as FINRA. Thomas Gira, who oversees FINRA's market regulation department, joined in 1992, while fellow VP Cameron Funkhouser started in 1984. At least half of Finra’s top execs have been with the organization for over a decade. Meanwhile, other regulators constantly complain about being chronically understaffed due to employee churn.
Interestingly, only one of the highest-paid executives has experience working at firm with an investment presence. Randich was the former co-CIO at Citigroup. The best avenue toward employment with FINRA seems to be through exchanges and law firms, though it clearly isn’t afraid to hire juniors and promote from within.
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