“It’s a cyclical business, and it fell off of a cliff this year,” Alan Johnson, managing director of Johnson Associates, said in an interview. “There will be a lot of unhappy people by the end of the year.”

“We’ve gone from red-hot labor markets to a cool-down to layoffs,” Johnson said.

There are some bright spots ahead, with base salaries expected to increase 4% to 5% for a second straight year, according to the Johnson Associates report. But for public companies, pain in the stock market could negatively impact compensation, with equity prices falling below original grant values.

The same market tumult that’s hurt dealmakers has been good for equity and debt traders. As a result, equity traders are likely to see their incentive payments stay the same while their fixed-income colleagues are set to get a 15% to 20% increase. 

“Overall, that business will continue to be the star,” Johnson said of fixed-income trading, while those in equity underwriting and M&A bankers are likely to be disappointed by their end-of-year compensation. “They should see it coming, but deniability is always strong.”

“It will be surprising end of the year for most,” Johnson said. “They thought things would be better. They had job offers, pay raises and patted themselves on the back repeatedly. Now it doesn’t feel so good.”

Bloomberg / November 15, 2022