NEW YORK, NY--(Marketwire - November 4, 2010) - Wall Street professionals can expect to receive slightly larger year-end incentive payouts compared to last year as the pace of economic recovery remains uncertain, according to an annual compensation analysis released today by Johnson Associates, Inc., a New York-based compensation consulting firm. The expected modest increases dashed hopes during the first half of the year that Wall Street would see a second consecutive year of significantly larger payouts.
The closely-watched industry analysis shows that year-end incentives, which include cash bonuses and equity awards, are projected to increase by approximately five percent across the financial services industry, although some segments of the industry will see decreases this year.
Asset management, high net worth and alternative investments professionals are expected to receive the largest increases -- up to 15 percent -- this year. Last year, they were among the hardest hit. Meantime, fixed income and equities traders at investment and commercial banks, who last year received awards that increased by more than 40 percent, will be the hardest hit this year. The analysis shows their year-end incentives will decline by 20 percent or more.
"What started out to be a very promising year for Wall Street fizzled over the summer months," said Alan Johnson, managing director of Johnson Associates. "While asset management and alternative businesses improved moderately, results in other industry segments, including investment and commercial banking investments, were hampered by weak trading and reduced client activity. Most firms were forced to scale back their bonus pools from earlier in the year and as a result, year-end increases will be much more modest than originally thought."
| Business Area | Percent Change from 2009 |
| Asset Management/ High Net Worth |
Plus 10 - 15% |
| Hedge Funds | Plus 5 - 10% |
| Retail Banking | Plus 5 - 10 % |
| Prime Brokerage | Flat - Plus 10% |
| Commercial Banking | Flat - Plus 5% |
| Private Equity | Flat - Plus 5% |
| Investment Banking Advisory |
Flat - Plus 5% |
| Investment Banking Underwriting |
Minus 5 - Plus 5% |
| Staff positions/Senior Management |
Minus 10 - Plus 5% |
| Equities | Minus 20 - 25%+ |
| Fixed Income | Minus 25 - 30%+ |
Johnson Associates regularly monitors compensation trends among a wide range of commercial and investment banks, and financial services companies. Its quarterly compensation analysis is based on the firm's ongoing monitoring of the financial services industry and public data from eight of the nation's largest investment and commercial banks and ten of the largest asset management firms.
Outlook for 2011
Looking forward, Johnson expects modest growth and hiring as of now. "The larger firms are maintaining their international focus with much of the planned hiring to be outside the United States. The political and regulatory environment will continue to weigh on the sector in terms of pay magnitudes and design," concluded Johnson.
ABOUT JOHNSON ASSOCIATES
Johnson Associates is a boutique compensation consulting firm specializing in the design of annual and long-term incentive plans and establishing appropriate market pay levels. The firm is well-known for providing candid advice and for its expertise and in-depth knowledge of the financial services industry, including major investment and commercial banks, asset management firms, hedge funds and other alternative investments, insurance companies, and brokerages. For more information, visit www.jaiconsulting.com.
Contact Information:
Contact:
Ed Emerman
609-275-5162
eemerman@eaglepr.com