IT'S BONUS SEASON ON WALL STREET!Bankers will find out if they receive a lump of coal in their stocking or it will be like the days of old, when receiving six or even seven figure bonuses were not uncommon.
I spoke to an investment banking friend who works at Goldman Sachs, the most premier Wall Street bank, who indicated that it would be a miracle if salaries stayed the same this year (they usually go up about $100k each year) and that bonuses would be down 80% from prior year (from say $15 million to $3 million for the partners!). The key directors already announced that they will forgo their bonuses, which apparently will cost NY $178 in tax income!
WALL STREET BONUS STATS:
- Credit Suisse First Boston is supposedly awarding bonuses in a mix of cash and troubled investments that could either pay off big or yield close to nothing.
- Morgan Stanley announced that bonuses would be roughly 50% of prior year.
- J.P. Morgan will slash bonuses by 30% - 50%.
- Merrill Lynch has hacked bonuses by 50%+.
- Wachovia cut bonuses by a whopping 90% from prior year.
- UBS changed the entire way that they pay bonuses out - stretching the payments out over years to encourage long term rather then short term investment performance.
HOW MUCH WILL YOUR BONUS BE THIS YEAR?
I find out my bonus next week, and despite layoffs this year, I am still holding out hope that I might receive something nice. Last year I received a 72% bonus (as a percentage of my salary). If I had to guess I would say bonuses this year will be between 20% and 50%.
That said, I'm just happy to have a job.
Not so lucky for my wife in hospitality. The economy has taken it's toll. She's already been told that she will not receive her customary 10% bonus this year, and most of her senior co-workers, who haven't already been let go, have had to take 5% to 10% pay cuts for 2009.
Now see how much my bonus turned out to be in Part II here: http://www.onemillionbucks.net/2008/12/part-ii-how-much-will-your-bonus-be.html
SO, WILL YOU RECEIVE A BONUS THIS YEAR? HOW MUCH WILL IT BE?
Post as seen in the Money Hacks Carnival - New Year’s Eve Edition
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3 comments:
So what's it going to be? A lump of coal, or a golden ticket?
What I don't understand is... how is anyone on Wall Street getting any bonus this year? At my company, if we don't make money, we don't get a bonus and it seems like none of these companies made money because they've all had their hands out to the government.
Hi kake79! Thank you for your comment.
I think the answer is that, these banks consider their people to be assets that will make them profitable when the inevitable market upswing comes, so they want to retain their best talent.
Their best talent also know that they can always jump ship if they are as good as they think they are. So they continue to pay them out knowing most recessions only last a year or so... although this one is brutal!
I hope you enjoyed the post nonetheless - please subscribe if you like!
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