putting the fucking bears back in their places where they belong

Wall Street On Track To Award Record Pay By AARON LUCCHETTI and STEPHEN GROCER Major U.S. banks and securities firms are on pace to pay their employees about $140 billion this year -- a record high that shows compensation is rebounding despite regulatory scrutiny of Wall Street's pay culture. Workers at 23 top investment banks, hedge funds, asset managers and stock and commodities exchanges can... [more]

Wall Street On Track To Award Record Pay By AARON LUCCHETTI and STEPHEN GROCER Major U.S. banks and securities firms are on pace to pay their employees about $140 billion this year -- a record high that shows compensation is rebounding despite regulatory scrutiny of Wall Street's pay culture. Workers at 23 top investment banks, hedge funds, asset managers and stock and commodities exchanges can expect to earn even more than they did in 2007, according to an analysis of securities filings for the first half of 2009 and revenue estimates through year end by The Wall Street Journal. Total compensation and benefits at the publicly traded firms analyzed by the Journal are on track to increase 20% from last year. These companies paid $130 billion in compensation and benefits in 2007, at the stock market's peak. That fell to $117 billion last year. Let the Good Times Roll, Again The growth in compensation reflects Wall Street firms' rapid return to precrisis revenue levels. Even as the broader economy remains sluggish and unemployment approaches 10%, these firms have been boosted by a stronger stock market, thawing credit market, a resurgence in dealmaking and the continuing effects of various government aid programs. The firms' total revenues are projected to hit $437 billion, surpassing 2007's high of $345 billion, according to the Journal analysis. The rise is in part a function of higher revenues at Bank of America Corp. and J.P. Morgan Chase & Co., which acquired Merrill Lynch & Co. and Bear Stearns Cos., respectively. The rebound also reflects growing confidence by Wall Street firms that they can again pay top dollar for top talent, especially once they have repaid the taxpayer-funded capital infusions they received at the height of the financial crisis. So far, regulators and lawmakers have focused on making sure pay practices discourage excessive risk-taking, leaving to companies the question of how much is too much. In addition to banking giants Bank of America and J.P. Morgan, the Journal's analysis includes Citigroup Inc. It also includes securities firms such as Goldman Sachs Group Inc. and Morgan Stanley; asset managers BlackRock Inc. and Franklin Resources Inc.; online brokerages Charles Schwab Corp. and Ameritrade Holding Corp.; and exchange operators CME Group Inc. and NYSE Euronext Inc. To reach its 2009 projections, the Journal examined publicly disclosed compensation and benefit figures for each firm for the first two quarters. These include salary, health benefits, retirement plans and stock awards, and also typically include money these firms put away throughout the year to fund later bonus payouts. The Journal calculated each company's compensation as a percentage of its net revenue. It then used that percentage to estimate how much each company would pay over the course of the year at that rate, should the company's revenue move in line with analyst estimates. Third- and fourth-quarter revenue estimates were provided by Thomson Reuters. Investment banks such as Goldman and Morgan Stanley typically pay employees about 50% of revenue. The rate is lower at commercial banks, whose tellers and other retail-banking employees earn less than traders. Companies' final compensation figures could be affected by a slowdown in trading or investment banking, or by political pressure. Companies may also set aside more money for compensation at the beginning of the year, in order to avoid shortfalls, and ratchet back later. Pay experts cautioned that at least some companies could decide to ratchet down pay levels as financial results for the rest of 2009 become clearer. Major financial firms companies report third-quarter results starting this week. Goldman disputed the Journal's projection that the bank was on track to pay a record-high $21.85 billion. Goldman spokesman Lucas van Praag said the firm paid an average of 46.7% of net revenue from 2000 to 2008, lower than the 49% rate used by the Journal. Based on Goldman's historical average, the firm would be on pace to report full-year compensation and benefits of about $20 billion. In 2007, Goldman paid out $20.19 billion, its securities filings show. Bloomberg News The rebound in pay reflects growing confidence by Wall Street firms that they can again pay top dollar for top talent, especially once they have repaid the taxpayer-funded capital infusions they received at the height of the financial crisis. Above, the Wall Street bull sculpture sits on display between Broadway and Exchange Place. Another wildcard is whether financial firms will bend to public and political pressure to rein in pay. "Compensation played a role in the financial crisis, and yet nothing has changed," says J. Robert Brown, a professor at University of Denver's law school and an expert on corporate governance. The Obama administration's pay czar, Kenneth Feinberg, is expected to issue as soon as this week his findings on compensation packages at seven firms receiving large sums of government aid, including Bank of America and Citigroup. Among firms that are facing scrutiny from Mr. Feinberg, Citigroup is on pace to pay about $22 billion, down 32% from last year. Bank of America is on track to pay about $30 billion, up 64%, the Journal analysis shows. But much of that increase reflects Bank of America's purchase of Merrill Lynch. Both banks are on pace to pay less as a percentage of net revenue than they did in 2008. Financial firms say they need competitive pay packages, pointing to threats from non-U.S. companies, private-equity firms and hedge funds. Mr. van Praag, the Goldman spokesman, said the firm understands the public sentiment over bankers' pay, but added: "The easiest way to destroy the firm would be if we didn't pay our people...Destroying a profitable enterprise would not be in anybody's interest." Goldman also says employees have long had a stake in the company's long-term results because many receive large portions of their pay as shares they won't be able to access for several years. Average compensation per employee is on pace to reach about $743,000 this year, double last year's $364,000 and up 12% from about $622,000 in 2007, according to the Journal analysis. Michael Karp, cofounder of recruiting firm Options Group, says he doesn't think "2007 is back," adding that Wall Street executives have leeway to pay less and don't want placards in front of their offices decrying big pay packages. At some firms where revenue is rebounding at a slower rate than rivals, more incoming cash is going toward pay. In the first half of 2009, Morgan Stanley paid out or set aside about 70 cents of every $1 in net revenue for compensation and benefits, up from its historic rate of about 50%. At the recent rate, Morgan Stanley is on pace to pay about $16 billion for 2009, up 33% from last year, despite a projected 6% decline in revenue. Many analysts expect Morgan's 70% ratio to come down in the second half of the year. The New York company says its revenue has been hurt by a rise in the prices of bonds it has issued, which makes it more expensive for the firm to buy them back. The company added that compensation levels will likely be pushed higher by a brokerage joint venture it introduced this year with Citigroup. Write to Aaron Lucchetti at aaron.lucchetti@wsj.com and Stephen Grocer at stephen.grocer@wsj.com [less]