2010/11 Wall Street Bonus Thread

Ericho - here's an SAT question:

Last year Bob's bonus was 4x his salary. This year his boss doubled his salary but cut his bonus by 75%.

This year, in total comp Bob got (choose from the following):
A) The same as last year
B) More than last year
C) Fucked
D) Hard
E) Both C and D

Ericho - here's an SAT question:

Last year Bob's bonus was 4x his salary. This year his boss doubled his salary but cut his bonus by 75%.

This year, in total comp Bob got (choose from the following):
A) The same as last year
B) More than last year
C) Fucked
D) Hard
E) Both C and D

ericho only sticks with headlines...no actual analysis is done

Sometimes, he doesn't even finish the headlines.

""Spoke to a friend at MS. He manages a team of 10 people. Two are getting a bonus, 75% smaller than last year. Ouch.""

"Yes but their base was 100% bigger."

I didn't ask if they got a raise last year. I'll find out and report back.

look, compensation (if one is willing to acknowledge the variables that translate across different "wall street" firms and businesses) is still trending down. its not the disaster many seem to embrace although I must admit the stuff coming out of MS seems pretty dismal if true and will likely hurt their franchise. other big places, not so bad. hedge funds and pe firms will be paid in accordance with performance - just like they always have. but to be clear, those popping champagne bottles from yesteryear are still a long ways from being on ice again.

"hedge funds and pe firms will be paid in accordance with performance "

Of course, performance is generally over high-water mark... meaning a huge chunk won't have performance fees for yet another year.

Goldman just announced that total compensation for the year will be down 5% vs. 2009, a down year.

http://www.crainsnewyork.com/article/20110119/FREE/110119851

And that doesn't factor in the deferrals and such.

So total comp per head decreased 15% since headcount was up 10%.

Not good, not good.

Plus, more of that Total Comp is deferred. I can tell you that I and most of my colleagues do not view deferred comp as disposable income. In fact, most of us do not count on it. If/when it comes, gravy. If we leave, it disappears unless someone buys out our deferred equity, which isn't guaranteed and is likely to be in the form of deferred comp from the new firm, if at all.

"Plus, more of that Total Comp is deferred. I can tell you that I and most of my colleagues do not view deferred comp as disposable income."

Isn't that the whole point?

>Isn't that the whole point?

Hardly. Working Wall Streeters and Hedge Funders were never majority cash buyers in their home. They wanted to keep money in the market (equities, etc.), and so took out jumbo mortgages. With a resurgent Wall Street, having some of your comp locked up longer-term (which is nothing new) in Morgan Stanley or Goldman Sachs, or your hedge fund, etc. is not considered a bad thing.

I actually agree with most of what you wrote, huntersburg, but am struggling to see how it responds to my question.

Ok, refresh me on the question. Thanks

Isn't the whole point of moving comp from cash to deferred to have people not treat it as disposable income? (Okay, it's not the *whole* point, but generally with deferred comp you want people to be invested in the longer term prospects of the bank. You seem to be asserting that's good. I agree, although perhaps for different reasons.)

deferred comp certainly isnt diposable income but its not "gravy" either. depending on your plan you can defer for as little as two years so its a pretty bankable source of income. and the ratios of deferred comp havent risen that dramatically in the past two years despite what may have been reported.

Pulaski: ""Spoke to a friend at MS. He manages a team of 10 people. Two are getting a bonus, 75% smaller than last year. Ouch.""

Ericho: "Yes but their base was 100% bigger."

Thei base did not increase last year. Four people got a 5% raise, rest did not get anything. Bonuses were just handed out. Ah... my friend says half his team is ready to quit. He himself is working on his resume. No bonuses for team. He as a team leader got 25% of what he got last year.

Just out of curiosity: How'd the team do this year?

Barclays to start paying bankers in... well.. bonds...

http://edition.cnn.com/2011/BUSINESS/01/24/barclays.pay.overhaul.ft/index.html?eref=edition_business

That's just sad. Cocos!? that's the best acronym they could come up with? The article makes it sound like they'll be paid with beads instead of guilders (although that may be the right PR move.)

According to Dealbreaker, Credit Suisse paid its research analysts bonuses of $0-5K.

Brokers must be salivating!

oh my lord. less than $5k. Are we kidding?

Another item on cash vs stock portion of bonuses:

http://www.bloomberg.com/news/2011-02-01/citigroup-said-to-boost-stock-portion-of-2010-bonuses-for-bankers-traders.html

[At Citigroup] "The New York-based bank aims to pay some recipients as much
as 50 percent of 2010 bonuses in shares, compared with about 40
percent a year earlier, one of the people said, declining to be
identified because the plans aren’t public. The percentages are
guidelines and individual awards vary, three people familiar
with the matter said."

The news there is that a basket case like Citi is still paying bonuses. What is wrong with this picture?

AvUWS said: "The news there is that a basket case like Citi is still paying bonuses. What is wrong with this picture?"

Well, you know, there's benefits just from survival. Remember, both Bear Stearns and Lehman failed, and they were huge organizations. There's almost certainly some business that their succcessors (JP Morgan, Barclays) didn't manage to hold onto, and all the other surviving banks got some of that. So even Citi probably has net gained corporate clients to help keep them busy, even after all that bank's been through.

More on the cash vs. non-cash problem:

http://dealbreaker.com/2011/02/bonus-watch-11-credit-suisse-has-an-arithmetic-problem-for-employees/

"Credit Suisse has jumped on the tantra bandwagon and decided that 2010 bonuses will be paid out through 2014 (bonuses above $50,000 are subject to deferral, no matter the recipient’s title at the bank). Here’s what employees have to work with: ..."

Even with all the non-cash, restricted issues... still down 9% (off a year that wasn't very good). So much for the bounce.