There’s Less and Less Financial Incentive to be CEO as Other C-suite Roles Earn More and More Money

Some C-suite jobs also command higher pay because the job has changed. “If you were the CFO 20 years ago, you were the chief accountant,” says Alan Johnson, a New York–based compensation consultant who focuses on financial executives. “Now your job is bigger and may have operations reporting to it.” For example, a Deloitte survey last year found that 28% of CFOs say their direct reports include their company’s chief information officer or other IT head.

One other factor may contribute to rising pay just below the CEO: Those positions largely escape public scrutiny. “Certainly there are outlandish pay packages,” says Johnson. “But when you’re getting beat on, the focus is almost always on the CEO. No one asks about the No. 2, 3, or 4 job.” In addition, pay for C-suite members other than the CEO and CFO aren’t always reported.

Fortune / August 2, 2023


Uncertain Markets Drive Drop in Bonus Payouts

Among financial institutions, it’s been more of a mixed bag, with bigger winners and bigger losers than in recent years, said Alan Johnson, president of Johnson Associates.

“Usually there’s a vignette or two, but there are multiple this year,” he added. “We haven’t even had the debt crisis yet. It’s more uncertain and there’s greater variety than we would typically see.”

Compensation committees will have to have to take a closer look at how the uncertainty is affecting their company specifically when deciding incentive pay targets and payouts.

“Some years, you can put out a generality and say markets are up 20% or markets are down 20%,” Johnson said. “This year will depend on the bank or the firm; different departments may be up significantly, different departments may be down significantly. So, it’s not going to be a consistent, easy story. Do your homework — you’re going to have to know the markets you’re in, what’s really going on in those markets. This is going to be a year where the committees are really going to have to dig in.

“It’ll be disappointing,” Johnson said. “A majority, not all, but a majority of people will be disappointed.”

Agenda / May 30, 2023


Executives and Directors Need to Comply with New Stock Trading Rules

“The biggest change here, and the reason the SEC wanted to amend the rule, was to keep public reporting companies and their executives from essentially abusing the rule by creating new plans whenever they wanted to trade,” said Alan Johnson, a managing director at compensation consultancy Johnson Associates.

Agenda / May 30, 2023


Wall Street Payouts Will be ‘Most Complicated Since Great Recession’: Survey

“It will be one of the most complicated years in the industry since the Great Recession,” Alan Johnson, managing director of Johnson Associates, told The Post. “Big banks are winning while regional banks are suffering big time.”

“It will be the year of the ‘haves’ and ‘have-nots,’” he added

Johnson predicts the most dramatic divergence in pay will be between those in investment banking advisory and those in retail and commercial banking.

The former could see year-end bonuses drop by 15% to 20% year over year, while the latter may see spikes between 10% to 20%, he said.

“For decades, the masters of the universe were the investment bankers but now they’re the ones getting hit hard,” Johnson said.

New York Post / May 9, 2023


Bonus Pools Shrinking at Traditional Managers: Report

Workers at traditional asset management firms can expect even smaller bonus payments than last year, against a backdrop of rising interest rates, inflation and disparate performance across sectors, compensation consultancy Johnson Associates forecasts.

Despite increases in assets under management across traditional firms and efforts to rein in costs, Johnson Associates projects a 5% to 10% decline in 2023 incentives from 2022 levels.

“It’s a little counterintuitive,” said Alan Johnson, managing principal at Johnson Associates. “Stock markets are up some, not universally, but up moderately, and incentive pay is going to likely be down.”

Employee sweeteners at alternative shops won’t contract as much as their traditional counterparts, the consultancy predicts.

“As a group, they’ll probably stay flat [in terms of incentive funding],” Johnson said. “Commercial real estate has taken a huge hit; valuations are way down. People are beginning to realize that the habit of people being in the office in 2019 is not coming back.”

ohnson Associates has also predicted a modest increase in base salaries this year: 3.5% to 4%.

“Some salaries are moderately higher, but they’re not at all on par with, certainly, inflation in the last couple of years,” Johnson said. “Inflation is not a direct driver of pay, and the reality is many employees have lost ground in the last couple of years.”

The smaller bump follows a year when firms hiked base pay by 5%, 6% and more to compete in the tight labor market. The attention to base pay was at a level not seen “even [during] the financial crisis,” Johnson told FundFire in April 2022.

FundFire / May 9, 2023


Crisis Jolts Wall Street Bankers Already Resigned to Tough Job Market

“It’s not a dire scenario, but banks are paring back the excesses from the last years and feel they are moderately overstaffed,” said compensation consultant Alan Johnson, who owns a consultancy that specializes in Wall Street pay…

Compensation was even lower for U.S. investment bankers, whose bonuses shrank about 30% to 50% from 2021 as deals dried up, estimated Johnson. Commercial bankers’ bonuses in the United States fell about 20%, he said.

Traders at U.S. banks bucked the trend, in some cases receiving modest gains in variable pay as trading activity flourished in volatile markets last year.

Banks have mainly been adjusting their staffing levels by not replacing employees who leave, said Johnson.

Reuters / April 5, 2023