Bonuses dropped by as much as 25% for the year, according to compensation consultancy Johnson Associates.

“After a terrible ‘22, people were hoping that things would be a lot better — but they weren’t,” Alan Johnson, CEO of Johnson Associates, tells The Finance Files. “Most people were pretty disappointed.”

Johnson says that, for many bankers in M&A, bonuses for 2023 could be less than half of what they received in a year like 2021. “If you made a million-dollar bonus in ‘21 and now you’re making $400,000 — compared to the real world, these numbers are a huge amount of money, but it’s still a heck of a lot less than a million.”

Johnson expects that many finance professionals will look for new jobs after the latest round of announcements, but “unfortunately, for the ones who are looking, there are not that many jobs.”

He says firms are always willing to talk to candidates they consider “superstars,” but “if you’re good or great, it’s going to be hard to find a better job somewhere else.” In other words, “there will be a lot of people locked in.”

For those sticking it out, Johnson says next year should look better for pay and job mobility.

Not every business was hit as hard as those in dealmaking, Johnson notes. Private credit did “pretty well,” and wealth management businesses within big banks performed better than other lines of business across the finance sector, he says.

Meanwhile, of the major banks that have reported executive pay for 2023, the changes are mixed. According to Johnson Associates principal Chris Connors, executive compensation within financial services will range up or down about 5%, but will generally be flat compared to 2022.

Increasingly, executive compensation is determined more on the basis of corporate objectives or “a scorecard approach,” Connors adds, “as opposed to moving up or down in lockstep with the broader incentive pools.”

The Finance Files / February 8, 2024