Rhetoric vs reality on Wall Street pay cuts
Conventional wisdom holds that the compensation picture on Wall Street is so dire that top executives are retiring, top bankers are defecting for boutiques, and the sky is just about to cave in.
But DealBook suggests that the cash compensation carnage--some firms have imposed limits on cash compensation--hasn't been nearly as acute as the hand-wringing would suggest. The NY state comptroller has estimated that total payouts to finance industry employees declined 14 percent in the bonus season, while profits have plunged 51 percent.
"Despite the difficult environment, New York firms continued to pay roughly $20 billion in year-end cash compensation to their employees. The average bonus was $121,150, down just 13 percent from the previous year as the headcount shrunk. In 2006, the year before the financial crisis, the average investment bank employee took home a bonus of $191,360."
The people hurt the hardest in the cash compensation crunch were the top executives. At Morgan Stanley, a cash cap of $125,000 was imposed. But in total, accounting for all employees, the cash carnage seems more muted.
The analysis did not take into account non-cash compensation. If it did, it would reflect the fact that many employees stand to reap rich rewards if the banks return to their profitable ways and stock prices move higher.
- here's the article