COMP NEWS – Wall Street investment bankers saw record-high bonuses last year. This year their windfalls will be much lower, as compensation consultant firm projects that bankers’ bonuses will decrease by almost 45%.
Wall Street investment bankers can expect much smaller bonuses this year as the economy slows, according to projections published on Tuesday by Johnson Associates Inc, a compensation consultant in New York.
Bankers who underwrite equity or debt offerings are forecast to receive payouts that are 40% to 45% lower than in 2021, while their counterparts who advise on mergers and acquisitions will get bonuses that are 15% to 20% lower than last year.
The plunge in compensation contrasts with a windfall in 2021, when dealmakers brought in bumper profits as markets for buyouts and initial public offerings boomed.
“The labor market went from white hot to very cold, and now we’re having layoffs and hiring freezes,” said Alan Johnson, managing director of Johnson Associates. “It’s been quite a head-spinning turn.”
Bank executives will probably see annual bonus reductions of 25% to 30%, while asset managers will get 20% to 25% less than the previous year, the study showed.
In addition to bonuses being pulled back, several banks are eying job cuts in preparation for a potential economic downturn.
Goldman Sachs Group Inc began a round of job cuts in September, targeting about 500 people as its third-quarter profit slumped 44%, and other banks also trimmed staff. Morgan Stanley is expected to start layoffs in the coming weeks, sources told Reuters.
For more Comp News, see our recent posts.
Comp News is brought to you by CompXL, the flexible compensation software provider that enables mid- to large-size organizations to implement competitive pay structures such as vested stock options and variable incentive pay.