Wall Street bonuses are expected to fall 5 to 10 percent this year – the first time since 2011 that payouts are expected to fall across the industry, according to an annual report released Monday by the consulting firm Johnson Associates.
Last year, the average Wall Street bonus was over $170,000. In comparison, the median household income in the U.S. was nearly $52,000.
However, bonuses for Wall Street employees are more like deferred compensation than an extra end-of-the-year reward, said Paul McConnell, a managing director at Board Advisory, an executive compensation consulting firm.
“It’s not bonuses like most people think of bonuses,” he said. “What they’ve got is a form of compensation where there’s a heavy at risk component.”
At many financial firms, the biggest expense is their staff, so it’s often the easiest place to reduce costs in challenging times, says Joseph Sorrentino, managing director of Steven Hall & Partners.
Sorrentino says the report’s findings weren’t surprising, given “the sluggish growth in the overall global economy, the stock downturn so far in 2015, and the amount of regulatory oversight and the capital that’s going towards meeting those regulatory hurdles.”
However, there are some areas that are looking up. Mergers and acquisitions have been booming lately, so bonuses for people who work on those deals may rise 15 to 20 percent, according to the report.
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