Goldman Bonuses - $0 at Top

Consider that up to today, 50% of the money GS made went into compensation and bonuses.
And this current plan only excludes a small portion of the bonuses that get paid each year. Will they then be cutting everyone's bonus? So, we'll see. It is only the top 6-7 people who aren't taking a bonus this year. That's ok, b/c last year Blankfein earned a total of $67.9 million, and his base salary is 600k I believe. Think he'll be fine this year. I think bonus season on Wall Street is going to be interesting as the bonuses get released over the next 6 weeks.

banks that have taken fed money will not give any bonuses if they do expect the NY State and the Federal AG to immediately look into criminal wrong doing.

Kiss your compensation good bye.

@your_landlord - do you think that none of the banks will give any bonuses? I might wish it, but I am not sure I think it is likely....

tandare - do you think that the taxpayers will stand for any bank that recieved a bail out to give any bonuses?

@your_landlord - I am not disagreeing with that, people will be upset surely. I also will be somewhat surprised if *no one* receives a bonus, but I'll be surprised either way. I wonder what the finance blogs/message boards are 'hearing' these days.

i'm with tandare here, as much as it would be more palatable for me as a taxpayer to not give large bonuses to wall street employees that work for firms that took gov't money, it's just not likely. it will be smaller than last year for sure, but i'm not sure that it's going to fall much over what it would have given deteriorating business conditions. i.e., i don't think there will be a large penalty to your average banker levied by gov't for taking gov't money.

so what are the "upset" bankers going to do when they dont get a bonus? Quit and get a job at a nother firm??? good luck

In case you want some more info:
http://dealbook.blogs.nytimes.com/2008/11/17/how-goldman-spun-the-inevitable-into-big-news/
http://blogs.wsj.com/deals/2008/11/17/goldman-bonuses-the-neutron-bomb-of-wall-street/

I am hearing from a number of people across the larger firms that bonuses could be down as much as 50-75% from last year. I will let you know if I hear anything additional or more concrete.

what does that mean to the real estate market...50-75% down from last year doesn't mean they're selling their assets.

50%-75% is what the rumors are, and that is just the people who still have jobs. Total bonuses much smaller, paid in restricted stock not cash that doesn't vest for 3-5 years.

I know of no one who believes that Wall Street will ever return to its old glory days. Too much risk.

Yes, Julia, and it also means they are less likely to buy because they will receive less income this year. It's a vicious cycle that will pressure those who *need* to sell to lower their prices.

> what does that mean to the real estate market...50-75% down from last year doesn't mean they're
> selling their assets.

And you got this RE insight how?

Too many people (on this board and in general) don't understand bonuses on Wall Street. They are a normal part of compensation. For instance, a *typical* 30-year old might have a salary of around $100K and a bonus of $300K, for total compensation of $400K. Of course, that bonus does vary widely, it can be $$150-$200K in a really bad year, and swell to $500K in a phenomenal year. However, to suggest that NO ONE on wall street get any bonuses is akin to saying everyone in a particular industry should take a 50-75% pay cut. Yes, people would leave. In droves. Most of my friends who are ibankers would rather be unemployed then work for their salaries alone.

To be clear, I am not trying to justify the outsized bonuses for taking ridiculous risks, just making the point that elimination of ALL bonuses doesn't make much sense. 50% cut in bonuses compared to last year, or even 75% cuts are not crazy, on the other hand.

newbuyer99 - I work in a peripheral area of Wall Street and this was kind of my point - that I would be surprised if no one got a bonus. However I think it is perfectly reasonable for most people to get greatly reduced bonuses - and let's face it if your usual bonus has been $500,000 -- and you get $250,000 -- in my book that's still an absurdly large bonus in times like these. And "Main Street USA" will be appalled. Regardless, I'm dubious that somehow there'll be no bonuses, though part of me would like to see that.

And there is some wisdom to the fact that if hordes of ibankers quit b/c they didn't get the bonus they wanted -- just where would they go to work? There isn't a bank in the city that's on a hiring spree.

There is wisdom that bankers aren't likely to leave due to greatly reduced bonuses. My point was that a ton of them would leave with NO bonuses, because the base salaries are lower than pay at many other professions they could go to (tech, internal finance at companies, teaching/coaching, etc.). Hell, for a banker whose spouse works, staying home with the kids and getting rid of the nanny would almost make up for the loss of after-tax ibanking pay, assuming no bonus.

For the most part, banking really sucks and a lot of people (myself many years ago) decide it's not worth it for ANY money. It's certainly not worth it for 1/4 or less what you're used to making.

in china and india they will do that work for 1/10 the compensation.

not that it needs to go there...doesn't take that much intelligence to create "growth" for 3-5 yrs until the next artificially created bubble pops.

"However, to suggest that NO ONE on wall street get any bonuses is akin to saying everyone in a particular industry should take a 50-75% pay cut."

Hmmmm.... in the year they figured out that the last 5 years of "profit" were absolute bullshit, and were given back almost completely... you know, a 50-75% pay cut off ALL TIME HIGHS actually sounds pretty fair.

> It's certainly not worth it for 1/4 or less what you're used to making.

Except that they found 200k people to work for exactly that just a few years before.

The "no one will work for these lowered bonuses" idea is absolute bs. Most of these folks have nowhere else to go at anywhere near the salaries... and the salaries were inflated from the get go.

"the base salaries are lower than pay at many other professions they could go to (tech, internal finance at companies, teaching/coaching, etc.). "

If banking associates think they're getting tech jobs now, they've got another thing coming...

This "oh no, they'll quit" logic is absolute nonsense.

"They are a normal part of compensation."

Wrong verb tense. "Were."

"For instance, a *typical* 30-year old might have a salary of around $100K and a bonus of $300K, for total compensation of $400K."

For doing what, exactly? M&A? Gone. Trading? Gone but for currencies. Fixed income? Laughable.

"Of course, that bonus does vary widely, it can be $$150-$200K in a really bad year, and swell to $500K in a phenomenal year."

Then it could be $50,000 in a bad year, payable not in cash but in (worthless) restricted stock that doesn't vest for years.

"However, to suggest that NO ONE on wall street get any bonuses is akin to saying everyone in a particular industry should take a 50-75% pay cut."

Or their jobs will be exported elsewhere, giving them a 100% pay cut.

"Yes, people would leave. In droves."

Where would they go?

"Most of my friends who are ibankers would rather be unemployed then work for their salaries alone."

Really? Can they pay their mortgages making $300 a week in unemployment?

What nonsense. The days of massive overpayments to investment bankers are gone. They were made possible by 40x leverage and excessive long-term risk-taking. All of that is gone.

Retail banks don't pay that kind of money, and retail banks now control investment banks (BAC, JPM, C). If you think that hedge funds aren't going to be regulated, you're dreaming.

It is simply not coming back, and anybody who thinks it is is deceiving themselves.

"Most of my friends who are ibankers would rather be unemployed then work for their salaries alone."

Most people want a lot of things. Most people stick in jobs they hate. Somebody out of college with 2 years of banking experience doesn't have a lot of options right now. They'll be thrilled just to get their salaries.

I think you just have a lot of immature folks talking shit that they can't back up.

> "Yes, people would leave. In droves."

Lies. Check out what happened last time bonuses were this low... they not only stayed, they begged for jobs.

for the next few years bankers will earn about the same as CPA's. Welcome to the lower middle class...

nyc10022 - completely agree with you. Most bankers would much rather stay employed in this current environment. Even if they don't get any bonuses this year or next, at least they have the hope of bonuses in the future. They also have the benefit of staying fresh with continuous work experience on the resume while their laid off counterparts will quickly become stale. Most importantly, they have near-term income and health insurance. Yes, some people find banking too grueling, decide it's not worth the money, and leave - but this generally happens in good time when they are generally leaving for a hedge fund, PE, corp dev, or consulting position elsewhere. Good luck finding an open position now... Plus, they usually have a little FU money... Not the case now...

Most of my laid off banker friends fear they will never find meaningful positions on wall street and will have to follow a very different path... Some are considering full-time early retirement, but for others, it's not an option.

No bonuses, or reduced bonuses will impact Main Street a heck of a lot more than it will impact Wall Street because most Wall Streeters can afford a few years of base pay only.

What happens to maids, nannies, private schools, drivers, retailers, decorators, hair stylists, auto dealerships, charities, real estate brokers, Broadway, museums, Central Park, restaurants, the Hamptons, plastic surgeons, golf clubs, etc., etc. These were the people and places that have been dependent on Wall Street bonuses for years now. Now, they will lose their livelihoods and they may never see "good times" again!

It will be great to see rich people cutting back, but at whose expense?

"No bonuses, or reduced bonuses will impact Main Street a heck of a lot more than it will impact Wall Street because most Wall Streeters can afford a few years of base pay only."

Wrong. Bonuses typically make up 70% of income for these people.

lots of hatred for ibankers (some of it justified) on this thread, along with lots of people who still don't seem to get that the concept of "bonus" is different in an ibank. Most ibankers I know have undergraduate degrees in something useful, a decent amount of connections, and could land a job outside of IB. Many others also worked in other fields prior to getting their MBA's, and could return to those fields. Would it be easy? No. Would they do it if their pay (for a miserable job and a miserable lifestyle) were cut 75%? You better believe it.

Ask yourself this: How many people, in real life, do you know whose pay was cut 75% and they stayed at their jobs. I am fairly certain the answer is zero.

One other thought for all of you that rail against ANY bonuses. Don't you think banks "forbidden" to pay bonuses would simply double or triple the base salary to get around the restriction? Is that what you really want?

Will bonuses be slashed? Absolutely, as they should be. Will they go to zero? Not a chance. Should they go to zero? Likewise, not a chance, unless you all are proposing the end of all of the lines of business within finance institutions with a small base large bonus structure.

> Most ibankers I know have undergraduate degrees in something useful, a decent amount of connections,
> and could land a job outside of IB.

If only hedge fund jobs or working for the CFO were still an option...

I am very well aware of the post-banking jobs out there, and there aren't a lot of 'em left, and waaaay too many folks trying to get into them.

> How many people, in real life, do you know whose pay was cut 75% and they stayed at their jobs?

At time when it was the best option.... pretty much all of 'em.
That you haven't seen it yet is just because you haven't seen it... yet.

all the ex ibankers are trying to get health insurance jobs. it is the only industry where you can still rape and pillage citizens and make a ridiculous amount of money.

nyc10022 - I give up, we'll just have to agree to disagree.

We'll have our answer soon enough...

"Ask yourself this: How many people, in real life, do you know whose pay was cut 75% and they stayed at their jobs. I am fairly certain the answer is zero."

That's not the question. The question is whether they could ever get another job that paid nearly the amount they were making. And the short answer is NO.

steve, no, that's not the question at all. The question is - could they get another job that paid nearly as much as their new, 75% lower, compensation. And the answer is yes, pretty much anything - security guard, personal trainer, teacher, etc.

"The question is - could they get another job that paid nearly as much as their new, 75% lower, compensation. And the answer is yes, pretty much anything - security guard, personal trainer, teacher, etc."

Then why change jobs if you're doing what you like?

Because you don't like what you're doing, that was my whole point. At the junior and mid-levels, ibanking is pretty miserable - very long hours, always at someone's beck and call, terrible culture, lot of wasted time/work, etc. In my experience, people do it for two reasons - as a path to something else (say buyside), or for the money, or some combination.

Obviously, most of what I say doesn't apply to the ibanking execs, or even to the senior managing directors. But whereas this board seems to hate most ibankers and wish them ill, I actually feel bad for the analyst, associate and VP level people, and don't think cutting their pay 75% is the right answer. They're obviously not starving, but they've worked very hard and dealt with a lot of crap for opportunities and money, and are not really getting either. Not blaming anyone for it - it's a risk they took - just saying I feel bad.

"it's a risk they took"
very well said! not every bet pays off, no matter how hard we try.

" - just saying I feel bad."
ok, but lets keep things in perspective. there a lot of much worse things to feel bad about: hunger, poverty, disease, ... this is just a temporary bad job market. each gen x will get fired an average of 3 times after all.

"steve, no, that's not the question at all. The question is - could they get another job that paid nearly as much as their new, 75% lower, compensation. And the answer is yes, pretty much anything - security guard, personal trainer, teacher, etc."

If you think security guards make even 25% of Wall Street salaries, you don't know any security guards.
And you think personal trainers who were bankers the year before make 6 figures?

I believe median compensation last year was $300k, and that included secretaries (none made 300k, but they're in the analysis).

Not a whole lot is going to pay them $75k right now even. And for anyone with some experience, you're talking $100k.... I don't see them having too many options now.

Dude, $100K/year is nothing in this town, let alone $75K. I know nannies making $50K+ cash, which is better than $75K pre-tax. Anyway, this is a pointless conversation, you and Steve are as extremist on this topic as on most others you post on.

Yes, and how many of those nannies 'aint making the same this week.
Banks were also hiring $80k secretaries with no college degrees.

Its all past tense.

Hell, if you know any of these jobs opening paying this $100k, let me know... because I can introduce you to 10 folks looking for 'em. Seriously... point me at one.

If ex-bankers will have no problem getting these jobs, give me some leads... I know some ex-bankers looking.

seriously, let me know. I have some ex-bankers friends who would love to make $100k at any of those jobs. Let me know what openings you know of.

I am waiting for the investment banks, consulting firms, and law firms to cut the total comp for the first year associates which for investment banks and consulting firms were close to $200K. Expect a 25% reduction. That will set the tone coming in.

So that's what you have on your wish list for the holiday season? Have you written to Santa?

That assumes they'll be hiring any.

Not to add fuel to the fire, but below is one of the first articles on comp for 2008. I know PE isnt in the same sandbox as I-banks, but it is noteworthy...

The story is "PE firms still doling out record bonuses" Some highlights: "The total cash compensation (base salary and cash bonus) for senior associates at the largest buyout funds (those with $5 billion or more in assets) is now $435,000, a 4% increase over their 2007 levels. (Don't be misled by the "senior" in senior associate; these are first year M.B.A.s, says the report.) At the principal level, large buyout funds pay an average total cash compensation of $885,000, also a 4% increase from last year. Bonuses for principals at these funds rose 6% to an average of $607,000, which is included in the $885,000"

http://www.thedeal.com/dealscape/2008/10/pe_firms_still_doling_out_reco.php

A couple points. I saw that story in the deal - it's retarded, and if you think about it, you will understand why. 2008 bonuses have not yet been paid or announced in ANY PE firm that I know of. For PE, like ibanking, well over 50% of comp is bonus. So how can they possibly know what 2008 comp is, or compare it to 2007? That's right, they can't. More generally, I am quite familiar with these types of studies over the years (for myself and friends), and the methodology is complete crap. Definitions of titles, firms, pay, geography, etc. make it impossible to get a clear picture.

Speaking anecdotally, PE pay will be down this year, down more next year, hiring is way, way down, and layoffs are starting.

On the other hand, nyc10022, if you want to see the jobs I am referring to, sign up for the Glocap newsletter, or give me your email and I'll forward you names of 3-4 other headhunters that insist on sending me job opportunities fairly regularly. I'd guess I get about 5-10 a week, all of which pay more than $100K/year. Some are actually buyside, boutique IB, etc., others are all sorts of "finance" type jobs. I would guess your former ib friends wouldn't be interested in all/most, precisely because they don't pay enough (i.e. they still want to make their $300-$400K, or close), or are in crappy locations, or are boring, etc.