Bonuses–Not Wages–Sticky Downwards?
From The Times:
January 29, 2009
Wall Street bankers keep two-thirds of bonuses
Christine Seib in New York
Bankers in America’s financial heart saw their bonuses fall by only a third last year, despite the financial devastation wreaked on Wall Street, it emerged yesterday.
Thomas DiNapoli, the New York State Comptroller, said that Wall Street’s bonus pool fell by 44 per cent to $18.4 billion (12.9 billion pounds) last year, the biggest percentage fall in 30 years. However, because 19,200 people were sacked from their financial services jobs in 2008, there were fewer people to share in the pool. This meant that the average bonus was down 36.7 per cent, at $112,000.
Mr DiNapoli forecast a tough 2009 for the street’s workers. “The industry is still continuing to write off toxic assets. It’s painfully obvious that 2009 will be another difficult year.”
Richard Lipstein, managing director at Boyden Global Executive Search, said that many of Wall Street’s redundant employees had left the financial sector altogether. “Lots of people are making mid-career changes,” he said.
Bank of America (BoA) is expected to tell its bankers today that their bonuses will be deferred for at least a year. The new policy, likely to be announced when BoA informs employees of their 2008 bonuses, will mean that payments of $50,000 or more will be held back until 2010.
The bank is at the centre of a row over bonuses, after John Thain, the ousted Merrill Lynch chief executive, rushed through up to $4 billion worth of incentives for staff in the weeks before the bank’s takeover by BoA.
Andrew Cuomo, the New York attorney-general, has subpoenaed Mr Thain as part of his inquiry into bonus payments by banks that have received US government bailouts. BoA’s board last night expressed its support for Kenneth Lewis, the bank’s chief executive, who has been under fire for his handling of the Merrill acquisition.