NEW YORK Wall Street paid out $20.8 billion in cash bonuses in 2010, the fifth-highest amount on record, though the average payout fell 9 percent from a year earlier as financial reform drove banks to offer higher base salaries and defer more compensation.
The average cash bonus in 2010 was $128,530, according to the report released on Wednesday by New York state comptroller Thomas DiNapoli. The report estimates bonuses paid to securities industry employees who work in New York City.
Despite calls for restraint by federal regulators and politicians, overall compensation, which includes stock awards, grew by 6 percent in 2010, according to the report. In the first half of 2010, wages leaped 21.9 percent, partly due to cash bonuses that were awarded in 2009 but paid the following year.
Unlike most other employees, Wall Street professionals typically receive the bulk of their annual compensation in the form of year-end bonuses. The push to defer more compensation was meant to make some of the risk-taking behavior associated with the financial crisis less attractive.
"Past practices rewarded short-term gains at the expense of long-term profitability," DiNapoli said in a statement.
Wall Street profits last year totaled $27.6 billion, making 2010 the second most-profitable year on record since 2009, when profits totaled $61.4 billion, according to the report.
Outrage over federal government bailouts and fears that Wall Street's way of paying its employees encouraged too much risk-taking prompted spreading out these often-rich awards over more years and paying more of them in stock and options.
Still, the absolute figures associated with Wall Street pay are large: the top five U.S. banks paid staff a combined $119 billion for 2010, according to bank consolidated income statements.
Among those banks, Goldman Sachs Group Inc paid the most, on average, at $431,000. Citigroup Inc paid the least, at $94,000.
Wall Street is the pillar of the economies of both New York State and New York City. But due to the financial crisis, Wall Street's contribution to the state's tax coffers has fallen to 13 percent from 20 percent previously. For New York City, the decline was to 7 percent from 13 percent.
The bankers and brokers receiving deferred compensation will not owe income taxes until they sell shares or exercise stock options, which could lead to a delay in tax collections.
However DiNapoli, a Democrat, said gaining a more stable financial industry would offset such delayed tax revenue.
"The industry's greater emphasis on deferred compensation will hold down tax collections this year, but the state and the city will benefit in future years when taxes are paid on this deferred compensation," he said.