Murky shareholder benefits of lower pay

We noted recently that some big banks are doing the unthinkable: They're paying their executives and employees less on a percent-of-revenue basis. JPMorgan Chase (JPM) and Goldman Sachs (GS) have both taken steps in this direction, though the ratio could go right back up once the PR crisis has passed.

Still, some thought that shareholders were in line for something of a windfall, as compensation is the biggest single expense at many banks. But Fortune also notes that the earnings outlook is fairly cloudy right now. Some big earnings declines--and outright losses--will be coming down the pike, especially for the commercial banks in the fourth quarter. Citigroup is a great example. I doubt lower compensation will make the difference between a loss and gain but it certainly could mute any losses. One could argue that JPMorgan's earnings beat expectations in part because of lower payouts. 

For more:
- here's the article

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