Posted on 23 Feb 2010
As financial firms rebounded last year, Wall Street bonuses for employees in the New York City securities industry rose almost 17% to $20.3 billion in 2009, according to a report released Tuesday by the New York State comptroller.
That is compared to $17.4 billion paid in bonuses in 2008 after a record $42.6 billion loss in the securities industry. The 2008 figure reflected a 47% drop from what was paid in 2007, when securities industry employees received $32.9 billion.
New York Stock Exchange broker-dealer firm members earned a record $49.9 billion in the first three quarters of 2009, and Comptroller Thomas DiNapoli predicted profits could exceed $55 billion in 2009 for a new record. Salaries and bonuses averaged about 40% of net revenue in 2009, compared to about 50% in previous years.
The 17% increase in compensation and benefits was similar to expectations. A Wall Street Journal analysis in January projected an 18% increase in bonuses. Some Wall Street firms, bowing to public pressure, cut the size of bonuses.
The average taxable bonus in 2009 increased to $124,850, compared to $112,000 in 2008, Mr. DiNapoli said. Total average compensation at the largest investment banks, like Goldman Sachs Group Inc. and J.P. Morgan Chase & Co., was up by 31%, while overall average compensation increased 27% to more than $340,000.
Financial firms have responded to the public outrage over what is seen as exorbitant executive pay. Earlier this month, Goldman Sachs announced that its chairman and CEO, Lloyd Blankfein, would receive a $9 million bonus in 2009, which was lower than expected and a fraction of the $68.5 million he received in 2007.
His bonus, which will be added to his $600,000 base salary, is made up entirely of stock and no cash. That reflects a trend by financial firms to link compensation to a company's performance. Goldman also said in January that it would make the smallest employee payouts relative to revenue since the firm went public in 1999.
J.P. Morgan has said its chairman and CEO, James Dimon, will receive about $17 million in bonuses but no cash. Mr. DiNapoli said tying compensation to long-term profits was a step in the right direction, but added that there also needed to be the appropriate amount of regulatory protections to ensure that average Americans aren't hurt because of risky behavior by financial firms.
He said the largest financial firms reported that top executives wouldn't receive cash bonuses in 2009. As a result, he said it was more difficult to estimate total bonuses because of changes in compensation practices, such as delaying payments and paying more in stock or other forms of deferred compensation.
Securities-industry jobs decreased by 31,500 from November 2007 to August 2009, a drop of nearly 17%. But 3,900 jobs have been created from September through the end of last year.