Wall Street Bonuses on or above target for 2007

The banks haven't signed up any new deals since July. Only a handful of new buy-sides or sell-sides and certainly no new leveraged finance commitments (look at the lenders in the H&F / Goodman Global deal for a clue). The only thing that's keeping them going is S&T and PIA (goldman). Don't confuse profitability with revenue X 50% comp payout. I'm sure they'll all be profitable in Q4 but 50% comp accrual on much lower revenue can still result in bonuses being 35-45% lower than last year. My money is on 35-40% lower.

The only thing that will happen in 6-12 months is another 8% in price apreciation.

hsw-I hate to say this because everyone will disagree but the Manhattan RE market is in a world of it's own. I beleive the influx of foreign investors is a lot stronger than most realize. Manhattan RE is the crown jewel of many foreign investors so I wouldn't count on one factor like wall street bonuses.

Since when have you hated to say anything because people would disagree?

good point very funny but good point

exactly how many foreigners do you have living in your buildings (that you know of) anyway? In my rental building, i don't think there's any. Of course those are rentals. When I go to open houses, everyone appears to be american, but thats at my price point. I don't think its a myth but would like quantitiative information on exactly how many foreign purchasers there really are in this town.

I'm sure this kind of press helps NYC real estate appreciation:

http://www.reuters.com/article/marketsNews/idUKN268033420071026?rpc=44

Yes based on the article all you have to do now is sit back and watch Manhattan RE drop. It's that easy. Done deal.

There is a difference between dropping and perpetual appreciation at 10%+ / year, which is what you are implying is going to be the case in manhattan RE no matter what.

I almost forgot, my rent is due in a couple days. I need to break out that checkbook.

Where in the world did you pull out 10% per year. Who said anything about appreciating 10% per year.All I said is that a drop in wall street bonuses is no guarantee in a drop of Manhattan RE prices. I realize your rooting for Apt. prices in Manhattan to plummet And yes you may want to hold off breaking out the champagne but not the rental checkbook.

Umm isn't Q4 a wash anyway since you try to save new deals for next year since your comp has been determined already?

There are no new deals to push beyond Q4. IB bonuses will be down 30-40% this year and 10-15% of the IB workforce will be laid off, with more layoffs to come in Q1 and Q2 if things don't pick up. That might have a demand / psychological impact on the Manhattan RE market but we'll just have to wait and see.

Some of you are so micro. Start thinking more macro and you might be more worried.

I am new to this blog thing, so I haven't been keeping records of what I've been reading (I'll do better). Everything I've read has indicated that the total number of high-paying wall street jobs is stagnant (although those individuals certainly are getting richer), if not declining. Congress is considering some idiotic change in the taxation rates for income made by private equity deals (blame-deflection for this damn mess, speculative greed is always an easy target). Inventory has only begun to rise (vis-a-vis its anticipate levels), and we don't have the school spots for the family-sized units that we're building. Nasty, nasty, nasty scenario.

absoutready-Apparently you feel that writing these blogs will convince you and others that Apartment prices in Manhattan will drop so you along with me can scoop them up at fire sale prices. Everything you are saying is logical and easy to understand. I hope your logic can get through the thick heads of people out there and make them aware that they should drop there sale price now because according to your very lucid and factual analysis we are almost guaranteed to have a correction. I am looking for another investment property in Manhattan and I hope the people of this great city will wake up and listen to your rational warning and drop the sale prices.

Re: aboutready. I think the issue of sufficient school spots for family-sized units is really interesting. I don't know how big demographically the group is that would be swayed by it, but it would certainly be important if the trend toward young families staying in manhattan (rather than decamping for the suburbs) is to continue.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aee8LuCA1D2Y

Spunky you were right on with the bonuses this year. Wishful thinking didnt work out this time

http://www.reuters.com/article/marketsNews/idUKN3064813420071030?rpc=44

flunky -- did you hear that UBS is going to pay an even larger than usual portion of bonuses in stock? Do you think condos accept UBS stock certificates (them being printed in schwitzer deutsch and all)?

nice to be learning bonus news from ADP. Sort of like getting pink slipped by the cafeteria manager.

Zizizi - what's your source on UBS piece

Here's the link re: UBS. In short, they're using stock to prevent bonuses from declining so precipitously. I.e., gross bonuses down (maybe 10-20%), cash component down even more dramatically. The stock portion doesn't vest immediately, of course. Knew UBS' plan some time ago - now I think it's 0/0/.33/.33/.33, but may be wrong. Look for other banks to do the same. Higher stock payout also ties employees down.

http://dealbook.blogs.nytimes.com/2007/10/30/as-bonuses-look-leaner-ubs-takes-stock/#more-18511

OBVIOUSLY bonuses at CS this year will be huge, right spunky?

http://news.yahoo.com/s/nm/20071101/bs_nm/creditsuisse_result_dc_1

DB guys should be ok though....NOT....
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=auwSi8dh_QyY

Spunky, I don't WANT firesale prices. Alot of pain occurs when these things happen. Check out Bloomberg.com, just read today's breaking news.

As I said, I just think we've acted very stupidly and greedily in the past few years. Business never wants any regulation, UNLESS it's to bail themselves out of their own mess.

They say Warren Spector was a genius, able to run mortgage scenarios in his mind. Maybe he should have used a calculator.

aptly, UBS shares down over 5%

"...UBS says sub-prime exposure 16.8 bln usd, CDO exposure at 1.8 bln usd..."

Did I say 5%? I must have meant 12%

"...Already, there has been a record-breaking 141,442 finance jobs cut so far this year, according to executive search firm Challenger, Gray & Christmas. That far surpasses the previous record of 116,647 jobs cut in 2001. In just the last three months, financial job cuts totaled 73,000 — 46% more than in all of 2006. Even that number could be dwarfed by what is to come..."

How many mortgage related security / broker jobs were added over the last three years? Take that number and subtract it from your 141,442 and then compare it to your 2001 job cuts. What actually is being cut here? You are comparing apples to Slim Jim's. The 141k is sensationalized media bull.

Oh, so the number of jobs in 2001 and 2001 bonuses are the parameters determining real estate prices? I thought it was the number of jobs in 2007 and 2007 bonuses.

What I'm saying is that you are being over dramatic on the job cuts. If there were 100K jobs added in the past two years to support the mortgage craziness, is the sky really falling if I cut those 100k now? No, it is not.

zizi why don't you look at the number of bubble gum wrappers you find in the trash can and then come up with your Manhattan RE forecasts based on that. At least that would be more reliable than you're other figures.

Another figure you might like to use zizi is the number of window washers you observe at any given hour and than compare that number to that of the similar hour of last year. Do try to use the same location in Manhattan this way we 're comparing apples to apples. . Based on that you should be able to tell us how much the RE market will go down as well.What ever you conclude I'm sure it's going to be one heck of a negative forecast.That's something we can all anticipate from you No rocket science here.

spunky, you should do the honorable thing and stop posting abusive messages on the thread that ridiculous little you started. We all know you're a bitter divorced alcoholic with high blood pressure who "owns" a rent controlled studio in Bushwick.

zizi you must be describing your father. I am sorry you grew up in such a miserable fashion. Oh well at least your sane enough to post negative view points on the Manhattan RE market. Please continue posting.

is this board full of valuable content or what....

Well it ain't coming form you Oberon that's for dam sure. Nor your buddies MMafia, anon and zizi either.

If you're a big shot at UBS, your deferred comp went down 22% this year. At Lehman? 28%. At Bear? 40%. Citi? Ditto. A Merrill? 42%. Mortgate payments on your sucky $3 million loft near the Holland Tunnel exit not looking so low anymore, are they?

The only lucky bastards are at Goldman, maybe one of them can buy spunky out.

Wait for what the ECB and B of Canada are going to do next. Bye bye foreign investors.

zizizi, what most people don't understand is that Goldman has been hiding billions of liabilities in shady accounting. which is why I kept bringing up LEVEL3 accounting rule changes, which will force them to truly reveal its exposure.

just wait.. btw, I posted yesterday that now is the time to short financials, after I've been patiently waiting... SKF (an ETF that shorts the financials and also employes leverage) did close to 9% today. that's an 9% return in one day on the money I was going to put down to buy an apartment. Ohhhh baby- my downpayment stash just got big fat bulge. Looks like I'll need another brewskie tonight!!

MMAfia don't take this personal but with all the brewskies you're drinking you must be one hell of a fat dude. Just out of curiosity how fat are you? Like I said please don't take this as a personal attack.

hahah spunky, well, no offense taken since i'm about 5'10" and 155 pounds. now, if i were fat, i probably would take offense, so I guess you lucked out?

Mafia, GS level 3 exposure is mostly short, so they should do fine, Morgan Stanley on the other hand...

Oberon, I was inaccurate in my earlier statement.

In actuality, "Goldman Sachs has disclosed its Level 3 assets, two quarters before it would be compelled to do so in the period ending February 29, 2008. Their total was $72 billion, which at first sight looks reasonable because it is only 8% of total assets. However the problem becomes more serious when you realize that $72 billion is twice Goldman’s capital of $36 billion. In an extreme situation therefore, Goldman’s entire existence rests on the value of its Level 3 assets.

Defenders of Goldman Sachs and the rest of Wall Street will insist that less than 27% of their level 3 assets are represented by subprime mortgages yet that is hardly the point. Subprime mortgages, estimated to cause losses of $400-500 billion to the market as a whole, though only a fraction of that to Wall Street, have been only the first of the Level 3 asset disasters to surface."

In other words, LOOK OUT!

This info is from the Prudent Bear website.

MMAfia this is what I don't understand. You state your down payment bank roll is getting bigger and bigger since you are now short the financial stocks , long gold and oil. Yet one would think that since you claim to have the inside track why haven't you built up a larger bankroll. I mean haven't you been doing this for a number of years with your friends Buffett and Soros.

the honest truth is that I didn't have that much capital to begin with, although I'm building up as much as I can... my wife and I are still in the early phases of our career (late 20s/early 30s) so we're still in the 'early' phases if you know what i mean... you know, just got married, paid the wedding bill, saved up for our first home purchase, but decided to wait, yada yada you know the rest.

Gee MMAFia I can actually understand and relate to you las post. That's scary, What's even scarier is that if you were my friend I'd probably be willing to help you with the down payment to buy your apartment.

zizizi - you've mentioned declining bonuses. How about unemployment (this is not confrontational, btw, I'm curious)? My husband told me that a couple of days ago one of the big international law firms started laying off structured finance people. Law firms are notoriously slow to respond to market issues, so I've got to wonder.

aboutready-So now you think unemployment is going up. Okay so that's a new one on me. The unemployment rate is now going up according to aboutready because her husband knows someone whose about to get laid off. Gee, you are really getting desperate now. I think you would have a better chance for the Manhattan RE market to go down if you just get on your knees and pray, hope and wish it goes to a level that you feel is fair.

spunky, my downpayment slush fund is now sitting at $320k after cashing some of my profits from gold and covering some financial shorts. we were looking for a decent 1-bed since we don't plan to have kids soon, and could have bought one in the city with that kind of a downpayment.

i realize it's not $5million that some retard earlier said you must have to post in this board, and I'm close to but not in the top 1% since our combined income is only $250k, but it was more than adequate for the kind of 1-beds that we were looking at.

the point is- although i could have bought, i chose NOT to dump that downpayment slush fund into a 1-bed and wait till the smoke clears. because i believe i can buy more house with that same donwpayment in a year or two, after this Wall St. crisis is over.

the bonus is, the downpayment slush fund is growing rapidly, and today, it just grew by about 9% after cashing out SKF position. i keep my other savings and 401k stashed away in foreign investments, so as long as this downpayment slush fund keeps growing, i'm a happy camper drinking brewskies.

MMAfia I am actually happy for you. I hope you and your wife get what you want. I still once in while will give you stab here and there just for good housekeeping.

Oh spunky spunky spunky. I specifically pointed out that I was not being confrontational. I was just curious, as obviously I just stay at home in my little nest with limited to no knowledge. Well, it just seems to follow that if you're taking billions of dollars in losses, some people gotta go. Some of those may have just bought, some may have contracts out, etc. Some may just
not be able to pony up in the near future.

MMAfia - I'm fairly sure you know what I think about your real estate decisions. I am at a higher income, with a decade on you, but I concur totally. But, you should be able to get a decent two bedroom with your cash on hand and your income (if you wait 2 or so more years).

Good luck.

test

To add additional information to aboutready's anecdotal report, in this weeks Crain's New York Business in their business of law report (Nov 5-11) there is an article "Crunch squeezing out top-line work" it says. "Corporate practices are drying up, with big deals being postponed or falling through altogether. Some firms have begun shifting employees to bankruptcy and litigation work in hopes of cpitalizing on an imminent boom. Hiring is nearly at a standstill while firms determine reasonable responses."

I am quoting from the paper edition and am sorry that I can't post the link.

It not surprising to me that if there is a slow down in activity or uncertainty that billing and hiring would be on hold and thus have a potential impact on the economy.

Well, thanks spunky and aboutready.

Only the future will tell what will happen, but I'm trying to reach out to all those who are reading this forum who are in a similar position as I am in... buying your first place is a huge commitment and can be very stressful, especially given what's going on right now.

MMAfia, buying a home is stressful no matter what is going on. Closing on my first place was one of the most stressful and emotional things I have ever experienced (it was in Boston by the way....so we have the home front in common). It is such a personal thing and, as you said, a huge commitment. However, once I did it, it felt great. I truly saw things differently and was really glad once I pulled the trigger. Buying my first place in Manhattan was twice as stressful based on the cost of entry, but again, very much worth it. Owning a part of this city is different than owning in any place in the world. This city rocks.

Hey, I hate to rain on on all of the hater's parades here (including my own), but it looks like bonuses are going to be down only 5% this year, according to this article. Not a big drop, but it seems like it is skewed toward GS (by bigger bonuses at Goldman), and I gotta think this will mostly help the very high end of the market, no? New theory: divergence between the A apartments and the C apartments? Can that occur, where the A places get more expensive and the shoddier ones get cheaper? Any thoughts? Check it:

http://www.bloomberg.com/apps/news?pid=20601109&sid=aNSK6SSBn5Zc&refer=home

Yes, of course it can occur for a certain amount of time. It already has in the coop market. Your B and C properties have been declining, while your A (Park and 5th Ave. pre-war) have gone through the roof. But this only has an affect for so long, and this goes back to my point that only so many apartments are bought with Wall Street bonus money. And it only goes to reason that it declines as most of those who have so abundantly have already bought. There are only so many made newly rich a year who need to buy.

aboutready what about another negative issue that will affect the Manhattan RE market. Thus far you have enlightened all of us about Condo saturation, credit issues, Wall Street layoffs, wall street bonus cuts, unrealistic asking prices, rise in unemployment,, etc, etc ,etc.
But what about the other issues you need to explore like the sky is falling and the melting of the glaciers. Both of course should be a concern should they not. The sky falling part should have a major impact on those that own Penthouses with terraces don't you think.Bottom line these two issues alone should cause a nice correction in the Manhattan RE market.

Well, if the sky is falling and the glaciers do melt I guess I don't have to worry about purchasing at all. Why go through the agony of the purchase process when doom is around the corner anyway?
I feel even better about my decision to wait, I may never need to buy. Thanks for another enlightening post, Spunky.

Yes but before the sky falls the Sun may crash into the earth therefore your wish of prices going down in Manhattan will be fulfilled. Unfortunately apt owners will still be responsible for paying taxes so you are right it's better to rent. Absoutready don't tell anyone but we are heading into a depression. Expect 100% of banks across the country to close down soon.This can happen as soon as today.

It's always good to have a friend looking out for you. I'm running to Chase and Fidelity right now to empty the accounts and store my money in heat-proof containers under my bed. When the depression does hit, I think I may be generous enough to host a modest dinner party, and invite my less fortunate friends. I won't gloat, of course, that's unattractive.

The news coming out of UBS (see below) confirms what most people have been saying about bonus season, but iis even more staggering for two reasons:
(1) It's a firm-wide cap on cash comp at a very low number by WS standards, which is unheard of. This means the best senior bankers will get no more than $750K total cash comp. So, suppose you have a salary of $200K, this means cash bonus of $550K, take home of under $300K after-tax, and this is for the very best MDs. In many bankers' cases, this doesn't even cover their annual cost of living in the NY region, let alone London. You can expect everyone from Director to Associate to get scaled back in cash terms well below $750K.
(2) They've announced this publicly. Why? So other firms can follow. It is UBS' greatest fear that other firms will not follow suit leading to a mass exodus of their own bankers, so instead they're assuming price leadership and guessing others will follow. Which they will.

http://online.wsj.com/article/SB119466417456288928.html?mod=hpp_us_whats_news

that's ok, smunky will find a way to turn this into good news - them bankers be so poor now, them can't afford to sell.

yournamehere, article is quite shocking. always this time of year when you think it cant be that bad. i would assume stock portions are going to be a lot higher this year as per the articles we have already seen. cant see an md being happy with 750 total. having cash limited to 550 is a bit of a kick in the balls. heard from some friends at citi bonuses at best are going to be flat or 5% down. but they expect that amount to be made up of a lot of stock. i suppose they are least getting it cheap now. i suppose m lynch we be giving out food hampers. heard any other news from the other banks?

Listen to what you're saying, "can't be happy with 750k". The layoff argument is a much better argument then lower bonuses.

down

Please read this WSJ article very carefully -

"...To soften the blow at UBS, bankers and traders will receive two kinds of stock. One kind will vest over three years; the other, a new "special'' stock, will vest within a year. Any pay UBS traders or bankers receive over $2 million will be entirely in the special stock..."

People will be paid much more than $750,000 - in fact it states some people will be paid well over $2MM! It's just that any pay over $750,000 will be made up of stock options will (mostly) fully vest WITHIN A YEAR.

Unless I'm understanding this article incorrectly?

The way I read this paragraph:

0-$750k in cash
$750k-$2mm in restricted stock
$2mm and up in special stock

You're reading it correctly. However, to your point, I don't think there's anybody who doesn't understand that people will get paid more than $750K, all in.

What's remarkable is the low level of cash comp. Even with the special stock, which will mostly serve as a salve for the highest paid. Plus, factor on that the usual lag between vesting period and holding period (i.e., it's yours but you can't sell it yet), and employees are both tied to their firms and cash-poor.

This is a really solid blog discussion, from the Curbed (real estate) website. Much more nuanced.

http://curbed.com/archives/2007/11/07/bonus_bouncing_more_grim_yearend_predictions.php

A couple of quotes:

[#52]
"Wall Street bonuses were supposed to save NYC from the national crash. Now, those are in the toilet, and suddenly they don't matter? Even if Goldman has a record year, when half of the bonus babies get half their last year's number, you think they're going to prop up the dying market?"

[#54]
"This is my first time on the site. Well, I'm a banker at a bulge bracket bank. Let me tell you, bonuses will be down. Big time. And remember many people got laid off, and those that still have a job have a ton of stock that just tanked. Sure, I've seen all of the comments that we should not feel sorry for bankers - no problem. But the point is, on a real-estate site - will this affect real estate prices? It must in my opinion. I've been doing a lot of shopping recently and it feels a little softer. It's amazing how quickly brokers get back to me - a year ago they simply did not return calls or emails. Now I ask for a showing at 7pm and they are there.

"Look the Manhattan market has a lot going for it - international demand and limited supply. But you'd be a fool if you thought Wall Street demand did not drive up prices for the past decade. It's bad on the street, very bad. Don't feel sorry for us but don't expect us to buy a $5mm apartment either. Wall Streeters are well-paid but most are very smart with their wallets."

People, factor in the fact that a larger chunk of this year's bonus will be paid out in stocks instead of cash, and these stocks can't be touched for years.

Then understand that stock payouts from bonuses three years ago that they can now cash in has... guess what? TANKED.

Tick. Tock. Tick...

From the OP:

"It's not smooth sailing," Lehman's chief financial officer, Christopher O'Meara, said, "but the worst of this credit correction is behind us."

That was on September 19. My how quickly things have changed in less than a month. Expect similar misconstrued optimism once the current panic passes and is temporarily forgotten. Only to resurface soon after, only worse.

This general downtrend cycle will continue for many many months and perhaps years as the defaults and foreclosures rise. Remember, we don't hit the peak of ARM resets until next year folks.

MMAfia-That Tick Tock has been going on for the past 6 years in Manhattan. You can continue mental masturbating about a crash in Manhattan real estate as long as you'd like but if I were you I'd try to get that crystal ball repaired or at last get a new one. I heard there is a sale on crystal balls that predict the crash at Kmart and Sears.

spunky, is it ok if I send you my rent check in ETFC stock? I know I'm a few days late, but we've been having some minor issues here with the credit markets. I'm sure you won't mind.

Hey zizizi this may come as a surprise to you, but uh I don't beleive 101% of all living in Manhattan work for Wall Street. In any case a stock broker such as yourself should be able to make up for lost ground next year. Maybe peddling penny stocks might be a more logical career move for you.

Really? so the fact that bonuses this year are suddenly not going to have any effect on prices? how cool is that!

I'll bet you'll explain to us soon why the Euro starting its downward spiral back to parity is also of no importance (because foreigners are *only* 30% of the condo buyers)

boy zizzi you are one pissed off dude.

Thanks spunky, I'll take that as a compliment.

You should a little hostility and piss and vinegar never hurt anyone.

Leave it to a foreign newspaper to actually provide more interesting information on the current state of the Manhattan real estate market than any of the local rags, especially the NYT.

http://business.timesonline.co.uk/tol/business/industry_sectors/construction_and_property/article3026028.ece

down it goes...i always said it!

down it goes...i always said it!

down it goes...i always said it!

down it goes...i always said it!

Just in . . . bonus pool down on average -25% for big five banks

And headcount was up 15% this year so per cap is down 40%

ydoor - do you have a link to an article?

not down for goldman, no link needed.

I've heard similar. Goldman the exception, which was expected all along. At other banks, down 25%-30%+.

Word also is another major round at BofA. Expect same at other banks.

Sorry, meant another round -coming- at BoA in Q1 08.

actually hearing that Goldman had a very bipolar approach this time around, more so than other years, where good staff gets paid extremely well, and the rest of the crowd doesn't get anything.

I've heard there are going to be more rounds of layoffs in Dec/Jan at Citi, BofA, UBS, DB and JPM.

Does anyone have any knowledge of typical severance packages for being terminated (not for cause) at a place such as the ones listed above?

1. your applicable bonus
2. any applicable stock options
3. approximately six to twelve months pay

Actually, malraux's not quite right. "Applicable bonus" as a layoff is usually a fraction of last year's bonus. 40% or so was common in the last downcycle. This year, at some banks, senior bankers will just get a goose egg and take the hint.

You don't get additional options/stock. The ones you have already earned, however, typically vest immediately. This can vary by firm, and doesn't always apply to all classes of deferred comp.

6-12 months pay is high. On top of the fractional bonus, you'll probably only get the standard "X weeks for every year of service", which typically isn't so generous (1-2 weeks for every year).

Sometimes it can be the greater of a percentage of bonus, or what your severance might have been by their formula. That would be more relevant for lower level staff though.

Spunky, this one is for you - ML FI bonuses down "only" 40%:

Merrill Lynch to Cut Fixed-Income Bonuses, People Say (Update1)

By Bradley Keoun

Dec. 17 (Bloomberg) -- Merrill Lynch & Co., the securities firm that reported a record $2.24 billion third-quarter loss, told fixed-income managers to cut 2007 bonuses by an average of 40 percent, according to two people briefed on the matter.

Payments may fall by as much as 80 percent for traders who specialize in the mortgage bonds and collateralized debt obligations that posted the steepest losses, said the people, who declined to be named because the decisions aren't public. Bonuses may drop 20 percent for interest-rate traders and 60 percent in the New York-based firm's corporate bond unit, the people said.

Chief Executive Officer John Thain, who joined Dec. 1 after the ouster of Stan O'Neal, said he will reward good performers while cutting payouts for people who caused losses. He has to placate investors by trimming wages while making sure the most valuable employees don't leave, said Russ Gerson, head of New York-based recruiting firm Gerson Group.

On Wall Street, ``they expect to get paid more every year,'' Gerson said. ``When that doesn't happen, people get upset.''

Thain and David Sobotka, who leads Merrill's fixed-income division, declined to comment through spokeswoman Jessica Oppenheim. Sobotka succeeded Osman Semerci after he was dismissed on Oct. 3 together with Dale Lattanzio, the firm's top fixed-income trading executive in the U.S.

The pay reductions were reported by CNBC on Dec. 14.

Merrill, the biggest U.S. brokerage, won't notify employees of their pay awards until early January. Managers are being told the size of bonus pools so they can decide how to apportion the money, according to the people briefed on the matter.

`Taking Enough'

``Paying the people who perform well and taking enough money from the people who caused some of the problems, that is going to be one of the first topics I address'' as Merrill CEO, Thain said in a Nov. 15 interview.

In the nine months through Sept. 30, Merrill's total compensation fell 15 percent to $11.6 billion, as revenue declined 23 percent to $20 billion, according to the company's most recent quarterly report. Even stock traders and investment bankers who generated profit gains this year may get little or no bonus increases, the people said. Payments, typically a mix of company shares and cash, may contain a higher proportion of stock this year, they said.

Merrill fell 84 cents, or 1.5 percent, to $56 at 10:10 a.m. in New York Stock Exchange composite trading. The shares had dropped 39 percent this year through Dec. 14. Among the five biggest U.S. securities firms, only Bear Stearns Cos. has fared worse, declining about 41 percent.

Komansky's Cuts

Compensation is the biggest expense for Wall Street firms, and bonuses typically account for about 60 percent of total pay. Last year, when Merrill's revenue climbed 33 percent to $34.7 billion, compensation rose 37 percent to $17 billion. The firm had 64,200 employees as of Sept. 30, up from 56,200 at the end of last year, according to company filings.

Merrill's revenue is forecast to drop 18 percent this year to $26.8 billion, based on the average estimate of 13 analysts in a Bloomberg survey. That would be the biggest decline since 2001, when the firm, then run by CEO David Komansky with O'Neal as president, slashed more than 14,000 jobs. That year, total compensation dropped by 18 percent.

Merrill's wage bill this year may fall about 10 percent to $15.2 billion, Bank of America analyst Michael Hecht estimated in a Dec. 4 report.

Nowhere to Go

Thain may be betting that employees are getting few job offers from rival Wall Street firms, Gerson said. UBS AG, Citigroup Inc. and Morgan Stanley also have dismissed top executives because of losses linked to home loans.

``There's no reason to pay big bonuses to everybody when the general perception or belief is that there are not going to be opportunities to leave,'' Gerson said.

Merrill last month agreed to pay Thain at least $44 million in stock and cash, partly to compensate him for pay he left behind in his previous job as CEO of NYSE Euronext.

O'Neal, who got no severance, took home $161.5 million related to bonuses and pension payments earned in prior years.

http://www.bloomberg.com/apps/news?pid=20601087&sid=av.X6yfQTkg8&refer=home

Bremig--Do you have any info on Goldman Sachs? How are they faring in bonuses?

GS avg per cap bonus is roughly flat vs last year (depends on the group) but there's more of a spread between top and bottom of the range so the impact is lost in the avgs (ie more people are making less money but the avg doesn't show that since those at the top of the range are making more than last year). GS is definite outlier. LEH is second best at down 5-10% (again, depends on group and the range is wider). Beyond GS and LEH it drops pretty quickly - bonuses down 25-50% depending on the bank, I'd say 35% down is avg for banks that have announced (or leaked) bonus #s - a handful don't announce until Jan/Feb. I'm not taking a position on whether this will impact the NYC real estate market.

Spunky - Care to enlighten us common folks on how much avg per cap bonuses are/will be UP this year at ML, Citi, UBS, BofA, MS, DB and JPM? You obviously have your finger on the pulse of the IB industry - I'd like to get your insight.

Flat you say ay

Bankers at Goldman Sachs will share a record bonus pool this week - despite continued fall-out from the credit crisis.

Goldman Sachs headquarters in New York
Goldman Sachs is one of the few banks to have successfully weathered the credit crunch

The investment bank is expected to reveal total compensation of around $18bn (£8.8bn) - ahead of last year's $16.5bn. However, the proceeds will be distributed among more staff, which works out at about $600,000 for each of the 29,905 employees. Last year the per capita bonus was $640,000.

Goldmans is one of the few banks to have successfully weathered the credit crunch. Despite writing down $1.7bn of leveraged loans, its profits for the first nine months of the year have risen a third to $8.4bn.

By hedging its exposure to US sub-prime mortgages, it insulated itself from the worst of the market problems.

However, the payment will inevitably set a threshold for rival investment banks looking to retain their most valuable staff. To ensure they retain quality staff, several banks may have to push their payout levels above 50pc of net revenues, which is unlikely to sit well with shareholders.
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Goldmans chairman and chief executive Lloyd Blankfein's bonus is expected to outstrip last year's $53m despite problems at a couple of its hedge funds.

For London's City workers, the Centre for Economics & Business Research has already forecast that last year's record payout of £8.8bn will fall by 16pc, or £1.4bn. The reduced pool, £7.4bn, would be the lowest since 2003.

The big American banks tend to distribute bonuses at Christmas, while the top European firms, with a calendar year-end generally follow in March.