Total compensation and benefits for jobs at publicly traded Wall Street investment banks and securities firms hit a record of $135 billion in 2010, according to an analysis by The Wall Street Journal. That’s up 5.7% from 2009.
The increase was driven by higher revenues, especially at the larger firms reporting their results.
However, deferred compensation now makes up a much larger chunk of executive pay, as much as half, in response to pressure from regulators. Firms are trying to deflect criticism that big cash bonuses trigger excessive risk-taking by executives and traders. In response, many Wall Street firms increased base salaries in 2010. This serves to encourage staff to focus on longer-term performance.
Top executives and others who directly boost a firm’s bottom line received the lion’s share of the pay increases. Stars continue to get paid more, with less available to trickle down to others in the ranks. Not surprisingly, Bank of America Chief Executive Brian Moynihan got a 67% bump in his total compensation for 2010. Goldman Sachs Chairman and CEO Lloyd C. Blankfein reportedly increased his stock-based bonus 40% to $12.6 million.
Elsewhere, CNBC reports that Citigroup’s investment bank is paying up to 65 percent of their bonuses for traders and bankers in cash, according to people with knowledge of the payments. This is a marked contrast to the deferred compensation or adjusted salary payouts at other firms, and could give Citigroup an edge in recruiting star talent.
A higher cash payout means employees have more money right away, and don’t have their fortunes tied to the performance of the company’s stock. On the other hand, it may not help Citigroup retain top employees. Once they’ve received their big cash payouts, they’re free to jump ship.
Overall on Wall Street, the average bonus is down from 2009. CBNC attributes this to shrinking bonus pools and higher headcounts at investment banking firms (hiring was up). That means there’s less money to spread around among staffers.
What’s your take? Have you seen a shift toward more deferred compensation or lower bonuses at your firm? Add your comments below.