* Bonus bump follows 5 pct rise in 2012-Johnson Associates
* CEOs to receive $12 million to $25 million
* Pressure from investors, regulators continues
By Lauren Tara LaCapra
NEW YORK, March 22 Bonuses at Wall Street firms
will rise 15 percent this year despite ongoing pressure from
investors, regulators and politicians about compensation levels,
according to compensation-consulting firm Johnson Associates
The projected rise in pay would come after a 5 percent
increase in 2012, which was considered "disappointing," Alan
Johnson, head of the firm, said in a presentation to the Wall
Street Compensation and Benefits Association that was released
publicly on Friday.
Johnson expects chief executives to receive pay packages of
$12 million to $25 million, even as investors question what they
perceive as a misalignment between performance and pay.
"Overarching frustrations (and) questions remain unsolved,"
Johnson said. Among those questions are, "What is the
appropriate balance between employees and shareholders?" and
"Why can't incentives go to zero?" he added.
Johnson's projections - based on his work with banks,
brokerages and asset management firms - are closely watched on
Wall Street, particularly as compensation remains a hot-button
issue for investors and taxpayers alike.
Since the onset of the global financial crisis in 2008 - and
the ensuing backlash against bonuses paid to employees of
bailed-out banks - the industry has made several changes to
compensation plans. Base salaries have gone up, while more pay
is deferred with clawback provisions to protect banks if deals
that seem profitable at first eventually go awry.
A new "say on pay" measure that allows U.S. shareholders to
vote on pay packages awarded to senior executives has also had
an impact on executive compensation. Last year, Citigroup Inc
shareholders embarrassed the bank by voting down former
Chief Executive Vikram Pandit's pay. The bank has since made
changes to its compensation practices for top executives.
The European Union and Switzerland have also approved
compensation caps that limit banker pay to a certain portion of
Yet those provisions have failed to prevent banks from
paying out higher bonuses, even in years when performance
suffers. Credit Suisse Group AG gave its CEO a big
raise last year, even though its profits fell.
The median bank or asset manager paid out a greater portion
of revenue to employees in 2012 than they did the previous year,
Johnson Associates said. That rise comes despite staff cuts last
year at most major financial-services firms.
Payouts of deferred compensation from prior years skews
those figures higher, according to the presentation. It is
difficult to tell on a firm-specific basis how much of a
compensation expense pertains to prior-year awards, because most
firms do not disclose those figures.
The lack of transparency about how compensation and
performance are linked will continue to hurt banks this year,