Wall Street workers' pay to fall 20-30 percent: report

Tue Nov 8, 2011 10:22am EST

People walk past the New York Stock Exchange on Wall Street, February 10, 2009. REUTERS/Eric Thayer

People walk past the New York Stock Exchange on Wall Street, February 10, 2009.

Credit: Reuters/Eric Thayer

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(Reuters) - The average Wall Street bonus will decline by 20 percent to 30 percent this year, according to a closely watched compensation report, as banks cut costs and lay off workers in a weak environment for trading and deal-making.

Employees in the bond-trading business will face the sharpest pay cuts, with bonuses down 35 percent to 45 percent from a year earlier, according to a projection by New York compensation consulting firm Johnson Associates.

Equity traders and senior executives will also have their bonuses cut by up to 30 percent, the firm said. Investment banker bonuses will decline up to 20 percent.

"The lack of economic recovery, combined with ongoing uncertainty in the world markets, and global and regional regulation are driving most financial services firms to significantly reduce the size of their bonus pools," said Alan Johnson, managing director of Johnson Associates. "As a result, most, but not all, professionals will receive smaller payouts this year."

Traders, bankers and top executives typically receive base salaries of $100,000 to $1 million, but most of their compensation comes as bonuses after year-end, based on the performance of the individual and the broader company.

The expected decline for 2011 comes after two years of record payouts for Wall Street workers, as markets staged a rebound from the depths of the financial crisis. This year, though, big trading and investment banking houses have been reporting increasingly bleak earnings and have begun laying off thousands of employees.

Last month, Goldman Sachs Group Inc reported the second quarterly loss in its history as a public company, while Morgan Stanley and the investment bank of JPMorgan Chase & Co posted sharp declines in third-quarter operating earnings before an unusual accounting gain.

In the first nine months of this year, Goldman, Morgan Stanley and JPMorgan's investment bank set aside $30.4 billion for compensation and benefits, down 7.8 percent from a year earlier.

The Johnson Associates report suggests that pay will come down by a much greater percentage. The only two business lines in the financial industry that may see slightly higher pay are retail banking and divisions that deal with high net worth customers, the analysis said.

(Reporting by Lauren Tara LaCapra in New York; Editing by Lisa Von Ahn)

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Comments (12)
johnnyjr wrote:
boo-frickety-hoo.

Nov 08, 2011 10:41am EST  --  Report as abuse
breezinthru wrote:
This reduction in pay is a good start but only a start. For too long, far too much of the ordinary investor’s money has gone to Wall Street compensation.

A one percent fee to each investor might might seem reasonable on the surface but when that one percent of a large amount of money is compounded over the course of twenty to thirty years, it accumulates to a rather large sum that should have been shared with the investor.

The account handler does not share in an investor’s losses. I tire of their arrogance.

Nov 08, 2011 10:43am EST  --  Report as abuse
K-dub wrote:
Glass-Steagall.

Nov 08, 2011 12:01pm EST  --  Report as abuse
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