* Bank employees to see 5-15 pct bonus bump: survey
* More profits will be used for bonuses in 2012
* Fixed income traders projected to see biggest gains
By Lauren Tara LaCapra
May 16 Big banks are expected to use a larger
portion of profits for employee bonuses this year, despite
extensive job cuts and a recent outcry from shareholders over
excessive pay, according to a closely watched survey of Wall
Bonuses are expected to rise 5 percent to 15 percent for
employees across the financial services industry, with
fixed-income traders projected to get the biggest bonus
increases, according to forecasts by the compensation consulting
firm Johnson Associates.
A chart in the Johnson Associates report showed compensation
and benefits inching up toward 68 percent of investment and
commercial banks' profits in 2012, from about 63 percent last
year. The figures are a median projection for eight large banks,
based on Johnson Associates' consulting work year-to-date.
The projected rise comes despite significant job cuts,
weaker profit estimates from analysts and investor frustration
with big pay packages at some banks.
In April, 55 percent of Citigroup Inc shareholders
rejected a plan to pay Chief Executive Vikram Pandit $15
million. The vote was non-binding, but was viewed as an
embarrassment for Citi's board and management.
Shareholders have been more supportive of pay packages at
other big U.S. banks including JPMorgan Chase & Co, Bank
of America Corp, Wells Fargo & Co and Morgan
Stanley, but big banks in the U.K. including Barclays PLC
and Royal Bank of Scotland Group PLC have also
faced investor backlash over proposed executive pay packages.
Goldman Sachs Group Inc shareholders will vote on
that bank's pay proposal at its annual meeting on May 24.
Johnson Associates said 2012 bonuses are expected to be
constrained for top executives whose compensation packages are
detailed in proxy filings due to "public optics" and regulatory
pressures. In recent years, banks have introduced clawback
provisions, more stock awards and deferred pay to align
employees' risk taking with companies' long-term welfare.
Johnson Associates projects that employees in fixed-income
trading businesses are likely to see the biggest bonus
increases, in a range of 15 to 25 percent, thanks to
improvements in bond markets. Employees who work in
interest-rate products are likely to see the biggest bonus
gains, according to the report.
Employees in equities trading will get 10 to 15 percent
bonus increases, while workers in asset management, prime
brokerage and high net worth areas will get 5 to 10 percent
bonus increases, the report said.
Hedge fund employees are projected to get 5 to 15 percent
bonus increases, the report said, while employees in private
equity and retail banking are projected to get bonuses ranging
from flat to 5 percent increases. Commercial banking employees
are projected to get bonuses ranging from flat to a 10 percent
The only area with a projection of possible bonus declines
was investment banking, where equity underwriting and mergers
and acquisitions have been sluggish. Bankers could face bonus
changes in a range of a 5 percent cut to a 5 percent gain,
Johnson Associates said. The firm based its 2012 projections on
year-to-date consulting work with big banks
"Economic recovery, varying impact of regulation both
globally and regionally, business mix, and ongoing uncertainty
in world markets are key 2012 incentive drivers," Johnson
Associates said in its report.