Bank bonuses this year are going to be ugly. Dodd Frank rules, plummeting bank stocks, and a poor global economic outlook all translate to a poor outlook on banker bonuses.
At Bank of America, bonuses will be down 40-50%, according to a BofA exec who spoke to Charlie Gasparino.
They also look bad at Goldman, where according to The Australian:
[The firm made ] an internal commitment to ensure that no more than 35% to 45% of its revenue is paid to staff — a lower proportion than any other Wall Street bank.
And at all banks, a good portion of the bonuses paid to staff are perpetually losing value, because most bonuses are now awarded in bank stock… which keeps plummeting.
Bonuses awarded last year are already worth 38% less at some banks, according to Financial News:
[Shares awarded for performance in 2010 at Credit Suisse, Deutsche Bank, Goldman, and JPMorgan] have already fallen in value by an aggregate $3.1 billion this year, a paper loss of some 38% since when they were granted…
So bank shares would have to double in price in order for them to be worth what they were last year –
On average, shares across the 10 banks are 56% below the exercise price of the 2.7 billion options outstanding at the end of 2010. This means that shares in the banks would, on average, have to more than double before the options expire in the next few years if staff are to make any money.
Translation: go join a hedge fund.