CY 2008 Investment Banking Bonuses

Thank goodness my tax money is going to pay bonuses to needy iBankers. I feel so good.

the most important part of the data is not shown, namely, that this represents data for those who still have jobs.
Close to half of the highly paid jobs are Wall Street have been or soon will be eliminated over the the several months.

Yes - there are several missing data points:

- what is the distribution among bottom, mid and top tier? (my guess is that this year is bottom-weighted)
- what is the cash/equity split? (although, for associates and VPs, it's typically mostly cash)
- what % were fired?

Yeah we're saved the 20 vps and 50 associates will buy all the RE in manhattan and don't forget the backup offers from the mariachi palyer -cha! cha! cha!.. if all else fails the Martians are standing ready and firm. :)

no, the Martians are waiting for prices to go down further

not too shabby, 2002 levels.

now lets get re prices to 2002.

the senior bankers will blow out the vps in a down market and keep the analysts/associates. revenue

here is some data thats more important...

how much of this is paid in stock..

a friend there talked to me a few weeks ago, the expectation was that a BIG chunk would be...

I have heard that much of this will be in stock, but nothing confirmed yet.

By confirmed I mean the % in stock. I expect it to be quite a bit.

I don't think a lot of this is in stock for these levels. But they do seem a bit high.

I am getting numerous confirmations that (1) these numbers are accurate, (2) only 10-15% is stock and (3) the distribution is indeed weighted towards the lower tiers. To be fair, these confirmations are 2nd or 3rd hand by the time they get to me, but I get the sense the numbers are legit.

Definitely higher than what I expected to see, especially for the top tier. Also, keep in mind, this is just bonus, doesn't include base salary of $100-$150K.

Why are you "regular" people so jealous of us bankers?

We will still get large bonuses, so I suggest all you plebeians just get over it. No matter if real estate drops 30%, you losers-in-life will never have the cash to afford to buy anything in Manhattan.

You bankers are douche bags. As a hedge fund guy, I can tell you if you had half a brain you would have made the transition. After the boom years, the fact that you didn't assures me you are a bottom of the barrel banker.

Sweet!!! Got my bonus. Now I definitely have to rush out and buy real estate.

So glad 2008 is over. No worries now. Not job security. Not the economy. Not the destruction of my life savings. My confidence is back, baby!!! Time to lever up and buy, buy, buy.

Maybe the play is lending to people who want to buy real estate....at a high rate with a low loan to value.

It is really not fun getting call after call from friends who just lost their jobs in finance. What do you say? You know that they are not going to get another job any time soon. You know their wife and kids. You know it is going to get much worse before it gets better. You know the economic numbers are bleak and deteriorating.

Yes, this is definitely the time to buy real estate.

"As a hedge fund guy, I can tell you if you had half a brain you would have made the transition."

Oh yes, because hedge funds are doing swimmingly these days. I met with a few this week and they were basically groveling for opportunities. Have to say I enjoyed it though, nothing like seeing a few of these guys with a big ole chunk of humble pie lodged in their throat.

10105, it's not even fun talking to your friends who are still employed in finance. Those MS bonuses? I've heard from friends that 2009 is the year they are REALLY fearing.

That is beside the point... The issue is banking as a job sucks, and during 2004-2007 everyone with any sense got out of it. They fact the industry grew too large and the market tanked in 2008 is after the fact. RR1 is basically bragging about being a douchebag banker.

Rhino,

I'm with you. But if we don't buy now, we will forever be priced out of the market.

;)

Honestly it seems so one-sidedly bad that I am trying to find the catch... Maybe people felt the same way in 1989 and all it took was a little time. At every price point there will be someone who for an emotional reason will see fit to buy... As you skim those people away over the next for years, the remaining bearish buyer pool will demand lower pricing.

Rhino, the banks lending practices will demand lower pricing. If cramdowns go through, banks will not write mortgages for more than what they think the low end could be -20% so you're guaranteed to stay in the game. That would be about 40% down now for this market. Say goodnight to the average person looking for a jumbo. Tanta did a good piece on what cramdowns will do on Calculated Risk, although she was talking about the market generally, not a market like Manhattan's which relies so heavily on the Jumbo mortgage.

This is much worse than 1989. Even if it was similar, it took prices a long time to rebound post 1989. I wouldn't expect it to be different this time. Why buy before prices fall? (We are at the precipice where nothing is selling, and sellers are still hoping for a miracle.)

People have challenged me for it... But at this point I wouldn't consider buying until prices rise.

By analogy I'd rather buy higher/later (1996-1997 vs 1991) with a better economy and downward momentum completely reversed.

I agree. Think it is pretty hard to predict how low prices could go. Tell me how bad the economy will get, and I would have a shot...

Okay - so are we all agreed? Get back together in five years and revisit the idea of buying?

If October '08 was our Black Monday of '87, I guess that's a fair idea... I have a pet theory that we could hit bottom faster this time given the internet and availability of information. In 2011, the cost of carry might be low enough to take a stab. Maybe even next year.... if we are talking a family apartment, at a deep monthly discount to renting, with a lifetime horizon. In other words, if I see a $3mm peak style 7-room apartment for $1.5mm, I am prolly going to go for it.

I still call B.S. on these numbers. Unless you tell me that the bottom/mid/high range was like 60/30/10% split, respectively.

RR1, i assume you are that "models and bottles" back office 1st year analyst?

I'm hearing the top was 10% or less, so Special_K, you may not be far off. Not sure how much of the rest is bottom vs. mid.

I usually never post on forums, but these numbers being posted by Dealbreaker seems to be extremely misleading. I am currently employed by a Bank that is performing much better than Morgan Stanley and we were basically told by our CFO that bonuses and raises this year will be limited. And we MADE MONEY in 2008, unlike Morgan Stanley. Secondly, even when people were getting paid well, bonuses that high were usually reserved for individuals who worked in the front office, basically about 10 to 15 percent of the workforce, most people work in the middle to back office. And we rarely get bonuses above 30% of your annual salary. I think too many people have been drinking the kool-aid and assume because you work on Wall street, or work for an investment bank you made a lot of money. This is not the case, a few individuals made a ton of money, while most people made average salaries. I hope I clear a few things up, but I can almost guarantee you that there is no way in heaven or hell Morgan Stanley employees will be getting bonuses that large this year.

Crains just reported that besides a large portion of bonus being paid in stock, the "cash" is being put into ESCROW. No joke.

They have clawback provisions now, and you can actually lose your bonus later.

Overall Crain's says the majority of Wall Street bonuses this year will be deferred compensation. Not a lot of house-buying with that...

NYC - I have heard the same thing. Firms are trying to be creative with how they are structuring the bonuses and some people are going to get very little if they leave.

That said, for some people they will walk out the door because what is waiting for them isn't worth sticking around for.

Whatever the government does to encourage home lending the banks are just going to lower loan to values and increase qualifications to offset. Econ 101 for price controls, in this case the price of money. Honestly given the leverage impact, -60% to price (other than positive sticker shock impact) seems more and more reasonable. An 10x price/rent on a 1200 ft / $5000 rental 2 bed = $600,000 = $500/ft or so... 2002 price if I have my numbers straight. Also if you figure $1.5/ft of maintance, or $1800, that yields you $3200/mo or 6.5% cash on cash return. None of these numbers feel like a stretch... Its so easy give me the catch please. I guess if you borrowed 1/2 the money to buy and rent the 2 bed, your equity return would be high...but in a collapsing market it should be high.

nyc10022, do you have a link?

its in print, the latest issue... I'll try and find the article and type the quotes out of it...

They also said that overall there is abotu 50% of the bonuses compared to last year.