White-Collar Wall Street Professionals Will Witness Layoffs And Bonus Cuts

On Wednesday, it was reported by a top compensation consulting firm, Johnson Associates, that Wall Street is likely to cut bonuses this year by 15 to 20%. These numbers were revised downward from a dire 30 to 40% reduction made earlier in the year. At that time, Alan Johnson’s views were pretty bleak, calling for 2020 bonuses to decline by as much as 40%, as the coronavirus outbreak hit markets hard and put millions of people out of work.

He considers the tough climate and predicts Wall Street firms will likely cut pay for almost everyone to save cash. Johnson figures “subpar” employees will see bonuses drop over 50% and possibly be fired. Johnson said, “Now is the time to get rid of the people you probably should have gotten rid of before.” He added, “The industry has been carrying some extra weight for a while.”

Johnson pointed out, “Technology has shown us that we don’t need as many people, don’t need as many management levels…and in many places there is going to be job insecurity.” He also believes that incentive compensation will be closely monitored, in light of the current social and political climate inspired—in part—by the Black Lives Matter movement. This enhanced scrutiny will extend to chief executives’ compensation at public companies, Johnson wrote.

“With the impact of COVID-19 and recent focus on justice and equality, it will require a thoughtful analysis and balance of performance, competitive and societal priorities, and customer and employee expectations,” Johnson wrote. “This is not a year to be tone deaf.”

Forbes / June 24, 2020

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Trump’s Visa Ban May Shake Up Fund Shops’ Hiring

Most employees who receive H-1B visas are hired to fill roles at asset managers that require technology skills, says Alan Johnson, managing director at Johnson Associates. BlackRock and Fidelity were each recruiting for tech jobs last year. Large firms with sophisticated recruitment teams are generally more likely to use the visa program, Johnson adds.

“The first thing firms are going to think about is: ‘Do we have an office around the world where we can put these people,’” he says. For example, companies can relocate positions they’d intended to be based in the U.S. to overseas offices.

Another option might be asking candidates to start their new jobs in January, Johnson says. The suspension of the visa program is set to end Dec. 31. And the presidential election could result in a change of the government’s immigration policies.

And the third option, he says, would be to fill those roles with U.S. citizens, Johnson says. However, he adds, that could be easier said than done.

Fund Fire / June 24, 2020

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Wall Street Bonus Forecast Not as Dire as in May

The latest survey by compensation consultant Johnson Associates predicts that financial services pay will be slashed by 15 percent to 20 percent in 2020 — a vast improvement from the 30 percent cuts the same survey predicted in mid-May.

“We’ve dug halfway out of the hole,” the report’s author, Alan Johnson, told The Post. “But that said, after a pandemic and the social unrest, it’s going to be an emotion-filled end of the year.”

Adding to the year-end drama, Johnson said, will be an uptick in pink slips, as Wall Street looks to cut costs in the aftermath of the pandemic, which is expected to lead to a decline in business for retail and investment bankers thanks to rising loan defaults and a frozen M&A landscape.

Johnson’s report also predicts that the Black Lives Matter movement could have real impact on year-end pay considerations, with executive compensation and pay ratios being looked at through a new diversity lens as financial firms reckon with racial inequities within their own walls.

“This is not a year to be tone deaf,” Johnson said.

New York Post / June 23, 2020

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Wall Street Likely to Cut Bonuses 15-20%, Make Significant Layoffs -Report

Incentive compensation will be under strict scrutiny this year and will take into account companies’ performance during the coronavirus crisis and the Black Lives Matter movement.

This scrutiny will extend to chief executives’ compensation at public companies, Johnson wrote.

“With the impact of COVID-19 and recent focus on justice and equality, it will require a thoughtful analysis and balance of performance, competitive and societal priorities, and customer and employee expectations,” Johnson wrote. “This is not a year to be tone deaf.”

Reuters / June 23, 2020

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CEO Pay Hikes Not Likely to Hold Up in 2020

Alan Johnson, managing director of New York-based compensation consultant Johnson Associates Inc., said increased CEO pay [for 2019] was “pretty rational” given the performance of firms last year.

Year-end pay for 2020, however, is “likely to be down significantly,” with senior executives apt to see pay decreases “at least as bad as everybody else,” Mr. Johnson said.

The fact that 2020 is also a presidential election year could have an impact on year-end pay for chief executives, or at minimum scrutiny surrounding these disclosures, Mr. Johnson said.

…Amid the economic downturn caused by the coronavirus, Walt Disney Co. Chairman Robert Iger is one of several executives who will forgo his salary, while Disney CEO Bob Chapek will have his salary cut in half, Bloomberg reported on March 30.

Moves such as this may conflict with the status quo in the asset management industry, however, to project stability in turbulent times to investor clients. According to Mr. Johnson, the message for many money managers to their customers and employees is, “We are here. We are strong.”

Pensions & Investments / May 18, 2020

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Traders’ Pay Outlook Brightens, if They Survived Latest Job Cuts

Bonuses for both equity and fixed-income traders could jump as much as 20% this year, according to compensation consultant Alan Johnson, the managing director of Johnson Associates Inc.

“This is their heyday” after several years of virtually no change in compensation, Johnson said Wednesday in an interview. “Sales and trading now is mainly a customer business, so you’re benefiting from the flows.”

While some traders are looking forward to a pay windfall at the end of the year, the outlook for the rest of the industry isn’t so rosy. Bonuses for merger advisers could tumble 25% or more, and payouts for underwriting work could drop 15%, according to Johnson.

Bonuses could fall 30% in retail and commercial banking as a surge in provisions for losses outweighs loan origination and deposit growth, he said, adding that the pay forecasts might be too optimistic depending on how the easing of lockdown restrictions plays out.

“If this opening up turns out to be a real problem, and then we have further shutdowns,” Johnson said, “then things could get a lot worse.”

Bloomberg News / May 13, 2020

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