Wall Street’s year-end bonus payments should take a hit

Wall Street’s year-end bonus payments are expected to take a hit this year due to the continuing impact of the coronavirus pandemic on the economy, according to a third-quarter compensation analysis by the consulting firm New- Yorker Johnson Associates Thursday.

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The report estimates that compensation bonuses, which include cash bonuses and stock awards, will generally decline in the financial industry, marking the second consecutive year of mostly smaller awards.

Retail and commercial bankers will be hit the hardest, according to the analysis, with their year-end incentive payments set to decline by at least 25% to 30% compared to last year’s payments. Investment banking advisers can expect their payouts to drop 15% to 20%, while payouts to asset management, hedge funds, and private equity staff will typically be 5% lower than 10% compared to last year.

At the same time, much larger incentive payouts are expected for sales professionals and fixed income traders (40% – 45%), underwriters of investment banking (35% – 40%) and professionals in the sale and trading of stocks (20% – 25%).

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Looking ahead, Johsnon expects some stabilization in 2021 with preliminary projections for “modest salary increases and stable to slightly increased incentives”.

“Sadly, as we look to 2021, even with an optimistic vaccine trajectory, the pandemic will continue to negatively influence businesses, but perhaps to a lesser extent than in 2020,” the company said. “Workforce cuts will continue in the first half of the year. Companies are transforming and adapting.”

The findings come as the United States has passed 10.3 million confirmed cases of coronavirus and more than 241,000 related deaths, according to the latest update from Johns Hopkins University. The COVID Tracking project recorded more than 144,000 new cases on Wednesday, a 9.3% increase from last week, with more than 65,000 people currently hospitalized.

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