Bonus bite: Wall Street bankers fear lower pay in 2013
A repeat in 2013 is unlikely, according to the office of the New
York State Comptroller.
In a report, New York’s state Comptroller said Wall
Street may not be able to match the $10.1 billion in profits it
had in the first half of 2013.
Last year, the average Wall Street annual salary, including
bonus, was $360,700, compared to the peak salary of $401,500 in
2007, just before Lehman Brothers collapsed and triggered America’s
financial crisis.The average salary of a Wall Street employer is
still more than 5 times the average New Yorker’s.
Former Goldman Sachs Chairman and CEO Henry Paulson was paid an $18.7 million cash bonus for his final six months of work on Wall Street in 2006.
“It’s too early to tell, but with profits down, I wouldn’t expect bonuses to be high,” Comptroller Thomas DiNapoli said in the report.
Wall Street financiers had similar fears this time last year, but
still averaged an 8 percent bonus bump in 2012 which increased end of
the year rewards to $20 billion.
More and more, financial sector employees are receiving their
bonuses in stock options, and no-strings-attached cash bonuses
are diminishing. This means some bankers may receive absolute
zero as an official bonus.
A global survey by eFinancialCareers indicated bankers aren’t
optimistic about big year-end bonuses, as half of the respondents
anticipate their banks will cut pay allocations. The survey was
conducted in September.
The first three financial quarters have produced strong results
for the US big banks – Goldman Sachs, Morgan Stanley, JPMorgan,
Bank of America, and Citygroup – which saw banking revenues
increase by 16 percent in the period.
However, higher interest rates, modest third quarter results, and
the government shutdown scare and the impending debt ceiling
crisis could hurt fourth quarter earnings, which would directly
“If we don’t have a good fourth quarter, bonuses will be down,
because the one thing we have done and have committed to our
shareholders is that our bonus payments will be directly
correlated to our revenue,” Gary Cohn, Goldman Sachs chief, told
Bloomberg News in an October 23 on-air interview. He added he
thinks bonuses will be ‘somewhat in line’ with last year.
Senior employees who don’t generate revenue will be among those
targeted for pay cuts, Robert Dicks, a principal at New
York-based Deloitte Consulting LLP, told Bloomberg News.