There have been mixed reactions to the news that the top Wall Street banks and securities firms will pay a record $144 billion in salary and benefits this year.
It marks a 4% increase from the $139 billion doled out in 2009, according to the latest survey from the Wall Street Journal. It parallels an increase in revenues at 29 out of 35 firms, rising from $433 billion to $448 billion, even after the slowdown in some profit-generating activities such as stock and bond trading.
The compensation figure represents 32.1% of revenues paid to employees. In percentage terms, this is still below the previous high water mark of 36% of revenues paid in 2007.
Naturally, there is some backlash against public firms continuing to reward their employees lavishly so soon after the end of TARP payouts. The article quotes Charles Elson, director of the Weinberg Center for Corporate Governance as saying, “Until the focus of these institutions changes from revenue generation to long-term shareholder value, we will see these outrageous pay packages and compensation levels.”
BNet, however, provided a more somber look at the compensation figures. First, they noted that these numbers are merely estimates. There’s still a quarter to go and anything can happen, such as when Golden Sachs decided to trim its compensation in the face of shareholder pressure.
Second, every autumn, the top firms quietly get rid of some of their highly-paid talent they think is dead wood. It’s a deliberate effort to shrink the claims on the bonus pool in the fourth quarter.
So while estimated salary and bonuses are up, the number of staff who may be receiving them may be shrinking. It may be a little too soon to count one’s bonus.
What’s your opinion? Do you expect your investment banking job compensation package to increase this year? Add your comments below.