Wall Street bonuses down as profits slide
08 Mar 2016
Wall Street is cutting back on bonuses, with the average bonus down 9 per cent to $146,200 last year, according to data released by the New York State Comptroller's Office yesterday.
Bonuses however, are still much bigger than during the financial crisis, but smaller than they were 10 years ago. (The all-time high was $191,360 in 2006.)
The decline comes after a dismal year for a financial sector that was not expected to get much better in 2016. Industry profits declined by 10.5 per cent, according to the comptroller's report and bank stocks had performed worse than the rest of the market all year (shares of Bank of America had fallen 20 per cent so far this year.)
''Both the state and city budgets depend heavily on the securities industry and lower profits could mean fewer industry jobs and less tax revenue,'' New York State comptroller Thomas P DiNapoli said in a statement. According to the estimates of state officials, the overall bonus pool for the current fiscal year was expected to grow modestly by 0.7 per cent, but now is expected to decline about 2.5 per cent.
Even as the average bonus size fell last year, the payouts continued to be strong in some areas, including among hedge funds or those consulting on mergers and acquisitions, according to compensation experts. ''There are many million-dollar bonuses, just a lot fewer than there used to be,'' said Alan Johnson, managing director of pay consultant Johnson Associates, washingtonpost.com reported.
Industry-wide profits fell 10.5 per cent, according to the annual estimate from DiNapoli. He added revenues were weak, especially from trading and underwriting and profits were also at their lowest reported level since 2011.
"This was the third consecutive year of lower profit," DiNapoli told reporters yesterday. "You do have a very volatile market."
