The New York State Comptroller’s report on the financial state of Wall Street is out, and that means a flood of industry data for all to see.
And what’s Wall Street industry data without an estimation of Wall Street’s bonus pool?
Big changes in the industry (like regulations that require bonuses to be paid as deferred compensation) and volatile markets (meaning some industry sectors are just stagnant) have really changed the game, so over the past few years, we’ve come to expect a few surprises.
Here’s what the NY State says the bonus pool will look like this year.
From the report:
In February 2012, OSC (Office of the State Comptroller) estimated that the cash bonus pool for securities industry workers in New York City (for work done in 2011 and paid during the traditional bonus season) declined by 13.5 per cent, to $19.7 billion... reflecting heavy losses in the second half of 2011 and changes in compensation practices.
These trends suggest that the total cash bonus pool for work performed in 2012 is likely to decline for the second consecutive year… While the total cash bonus maybe smaller than last year, some employees may receive higher cash bonuses based on the performance of their particular business activities. Johnson Associates (a financial services compensation consulting firm), for example, forecasts that bond and equity traders could see the largest bonus increases, while investment bankers may see declines.
You can check out the chart that illustrates this trend below. What’s interesting, though, is how these findings compares to a survey of how people in financial services see bonuses shaking out this year.
Most Wall Streeters in the survey (58%) thought their individual bonuses would go up, while only 26% saw them going down.
Strangely enough, though, 42% of the people surveyed thought bonuses would go down industry-wide.
So the 42% were correct, bonuses will likely go down industry-wide. The question is how many people are in the sectors (equity trading and bonds) that will likely get bigger bonuses?
Is it as large as 58%?
Check out the chart below: