(Reuters) - As Wall Street banks sharply cut costs, many of the industry's star bankers and traders are leaving their shrinking pay packages and firms behind.
Wall Street banks have outlined plans to cut thousands of jobs since mid-2011 because of lackluster business and decreasing profitability, and compensation consultants estimate that banker bonuses for 2011 fell about 30 percent, on average.
Goldman Sachs Group Inc (GS.N), for instance, cut compensation 21 percent to $12.2 billion, or $367,057 per employee from $430,700 per employee in 2010. The bank plans to take further steps to reduce costs this year.
The slash and burn approach may be turning off some senior bankers and traders, who are known to take umbrage at major cuts to their own salaries or to their divisions' share of the bonus pool in difficult years, recruiters say.
Many are now heading for the exits.
"Some senior employees are getting shown the door as part of broad cost-cutting measures and others are simply walking out the door on their own, presumably to try to find better opportunities," said Gregory Cresci, an executive recruiter at Odyssey Search Partners who works with Wall Street clients.
The exodus of senior bankers and traders has been most prominent at Goldman Sachs in recent months.
Recent high-level departures from Goldman include David Heller and Edward Eisler, co-heads of Goldman's securities business, as well as Ed Forst, co-head of its investment management division.
Milton Berlinksi, a top private equity banker, Kevin Kennedy, head of Goldman's Latin America group, and Jeff Resnick, the head of commodities, were among other prominent Goldman bankers whose departures were announced late last year.
Wall Street is known for pushing senior executives out the door to let younger, less experienced employees take on more responsibilities, particularly in times when cost-cutting is a chief concern, recruiters said.
On Wednesday, Goldman Chief Financial Officer David Viniar said recent management changes reflected a "natural progression" of partners retiring and a "very, very strong bench" of less seasoned employees getting promoted. Viniar suggested that many senior executives had put off retirement plans to help the bank manage the aftermath of the financial crisis and were now leaving of their own accord.
But the exits are not limited to any one Wall Street firm. There have also been high-level departures at Morgan Stanley (MS.N), whose chairman and chief executive, John Mack, retired at year-end.
The bank said this week that Walid Chammah, chairman of Morgan Stanley International, will also retire in the coming months. Chammah is a Morgan Stanley veteran whose former titles include co-president, head of capital markets and head of investment banking.
Earlier this month, Morgan Stanley also shuffled the top ranks of its legal division, with Eric Grossman taking over the role of chief legal officer from Frank Barron, who plans to retire from the bank at mid-year.
Some big names on Wall Street are eager to step out of the spotlight after enduring years of financial-crisis turbulence and negative attention from politicians and protesters, said Peter Ressler, the chief executive of RMG Search.
Former bankers are moving to investment firms and private equity firms, or seeking positions as directors on corporate boards and philanthropic groups, he said. Morgan Stanley's Mack, for instance, recently accepted a position on the board of Austin, Texas-based payment services company Rev Worldwide.
"The regulations that have been implemented have made it more difficult on a lot of levels from a bureaucratic perspective to get things done," said Ressler. "Some of these executives think if they go to the investment side or the buy side of the business, they won't be saddled with as much reputational risk and be unable to operate."
(Reporting by Lauren Tara LaCapra; Editing by Paritosh Bansal and Steve Orlofsky)