How Wall Street's New Anti-Bonus Culture Is Making Layoffs Worse

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Despite lackluster performance across the sector, bank chiefs’ 2010 pay increased by an average of 36% over 2009, according to data compiled by the Financial Times.

Banker salaries, which are typically uniform across each class of employee, increased, too, while bonuses dropped (three examples: here and here and here).

There are a couple of good reasons why salaries jumped. CNBC among others have pointed out that without high pay, banks might experience a talent exodus. (They might have been right, considering that London started demanding 50% of bankers’ bonus pay, prompting a disastrous hedge fund exodus from the city.) And some banks increased regular salaries and de-emphasised bonuses to discourage to the risky behaviour that contributed to the financial crisis.

But now those salary hikes might are being cited as part of the reason that job losses are about to hit the sector. (The main reason of course, is the aforementioned lackluster performance.)

Crains New York writes:

The salary increases have left the banks with elevated fixed costs at a time of stagnant revenues. The situation, JPMorgan analyst Kian Abouhossein pointed out in a report Tuesday, is a formula for “material staff cuts.”

The cuts could be most severe at Credit Suisse and UBS, which appear to have the highest fixed compensation costs.

Of course the simple answer would seem to be, cut salaries. But banks have to keep their salaries competitive across the industry. So it sounds like instead of cutting salaries, they’re cutting the employees who they can’t afford to pay so much. 

Brian Moynihan, Bank of America

Pay in 2010: $1,220,234

Pay in 2009: n/a

Source: Financial Times

Frederic Oudera, Société Générale

Pay in 2010: $2,323,917

Pay in 2009: $1,552,526

Source: Financial Times

Baudouin Prot, BNP Paribas

Pay in 2010: $3,530,624

Pay in 2009: $3,435,108

Source: Financial Times

Corrado Passera, Intesa San Paolo

Pay in 2010: $5,048,351

Pay in 2009: $5,298,943

Source: Financial Times

John Varley, Barclays

Pay in 2010: $5,945,946

Pay in 2009: $1,715,403

Source: Financial Times

Francisco Gonzalez, BBVA

Pay in 2010: $8,070,985

Pay in 2009: $8,954,596

Source: Financial Times

Eric Daniels, Lloyds

Pay in 2010: $8,367,953

Pay in 2009: $4,976,605

Source: Financial Times

Josef Ackermann, Deutsche Bank

Pay in 2010: $ $8,548,380

Pay in 2009: $10,604,185

Source: Financial Times

Michael Geoghegan, HSBC

Pay in 2010: $8,980,695

Pay in 2009: $8,850,593

Source: Financial Times

Stephen Hester, RBS

Pay in 2010: $11,537,346

Pay in 2009: $10,036,855

Source: Financial Times

Brady Dougan, Credit Suisse

Pay in 2010: $11,807,725

Pay in 2009: $17,684,443

Source: Financial Times

Lloyd Blankfein

Pay in 2010: $14,114,080

Pay in 2009: $862,657

Source: Financial Times

James Gorman, Morgan Stanley

Pay in 2010: $14,854,049

Pay in 2009: n/a

Source: Financial Times

John Stumpf, Wells Fargo

Pay in 2010: $17,568,387

Pay in 2009: $18,756,172

Source: Financial Times

Jamie Dimon, JP Morgan Chase

Pay in 2010: $20,776,324

Pay in 2009: $1,265,708

Source: Financial Times

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