Who Gets Bigger Bonuses – a Losing Super Bowl Team or the Average Wall Street Employee?

Meanwhile, each Kansas City Chiefs player is slated for $338,000 in bonus pay…

In the world of professional sports, six-figure sums are small potatoes. Super Bowl MVP Patrick Mahomes is working under a 10-year contract worth $450 million, according to Spotrac.

“This is not even chump change for him,” said Alan Johnson, managing director at Johnson Associates, a financial-services compensation consulting firm.

The stock market made a comeback in 2023, but the recently concluded year isn’t looking so hot for Wall Street bonuses, according to Johnson.

The 2023 bonuses getting paid out in 2024 are projected to stay flat or decline, according to Johnson’s firm. For example, people in investment-banking advisory work may see a 15% to 25% year-over-year drop in the value of their cash bonuses and equity awards, according to the firm.

Johnson’s firm analyzes different bonus figures from a tighter range of financial professionals than the Comptroller’s Office does. By his count, a yearly bonus in the range of $300,000 to $500,000 is common, Johnson said. Seven-figure bonuses “are not common” and reserved for the top 5% to 10% people at a firm, he said.

Wall Street bonuses aren’t just icing on the cake of finance jobs: They often represent a large chunk of a Wall Street employee’s compensation. For lower-level employees with bonuses in the $300,000 to $500,000 range, their bonus could be 50% of their pay. For Wall Streeters with a seven-figure bonus, that might be 60% to 80% of their pay, he said.

Johnson sees pay parallels between the football field and the C-suite. Each career can be short-lived with cutthroat competition and lots of burnout.

Careers in the high end of financial services can typically end in a person’s early 50s, he said. It’s safe to say a football-playing career is even shorter.

“For the amount of money these people make, it should be a grind, it should be competitive,” Johnson said. That statement holds true for both finance and football, he noted.

MarketWatch / February 12, 2024


Banker Bonuses Take a Hit

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


Financial Sector Pay Wavers Amid Broad Uncertainty

According to Alan Johnson, managing director at executive pay consulting firm Johnson Associates, boards in the financial services sector are struggling with how to set performance goals for certain equity compensation plans because the sector is heavily impacted by short-term turbulence.

Additionally, it has become increasingly difficult to forecast how the market will behave over the next three to four years, which makes it challenging to establish long-term performance goals for executive pay as well, said Johnson.

These challenges are not new to the financial services sector, but it’s become more difficult lately because of consolidation, changing fee levels and other impacts — making compensation in the sector less stable than it was five or 10 years ago, he said.

M&A activity has been very disappointing in the last few years, said Johnson. There was hope that last year’s activity would return to previous higher levels of activity after a “very dismal” 2022, but that turnaround hasn’t happened yet, he said, adding that financial firms have gone through some cost-containment measures as a result.

Indeed, looking to 2024, firms are cautiously optimistic about an uptick in activity, but not wildly so, causing them to manage their costs and headcounts quite tightly, said Johnson.

Agenda / February 5, 2024


Dealmakers Bemoan Brutal Wall Street Bonus Season: ‘People Were Shocked’

“As you look at the firm-by-firm data, each bank is starting from a different place,” said Chris Connors of Wall Street compensation consultant Johnson Associates…

“With bonus pools generally down, the strongest performers take a relatively outsized portion,” said Connors. “As the banks await an M&A rebound, they want to retain their best performers. On the flip side, they may be okay with their weaker performers voluntarily leaving.”

“Strong performers with long track records have had, and will have, opportunities to move,” said Connors.

Financial News / February 4, 2024


Banker Bonuses Are Down Again — but It Stings This Time

This bonus season is shaping up to be another underwhelming one for bankers on Wall Street as lackluster deal activity pushes down the closely watched annual payouts.

The bonuses that some bankers are getting are flat or down from what they received a year earlier, bank employees and recruiters said. Investment-banking bonuses have fallen as much as 25% so far, according to Johnson Associates, a Wall Street compensation consultant. And those payments are down from what already qualified as an underwhelming bonus season a year ago…

“It’s disappointing,” said Alan Johnson, managing director of Johnson Associates. “Everyone was hoping for a business rebound.”

Johnson Associates estimates that some traders are up slightly, while many others are down 5% to 10%—in line with the firm’s November forecasts. Bonuses to investment managers are falling into a similar range.

The Wall Street Journal / January 28, 2024


Wall Street Bonuses Fall Short of Already-low Expectations: ‘Absolute S–t’

An annual report from compensation consulting firm Johnson Associates at the end of last year predicted bankers could see bonuses dropping 15% to 25% this season.

“Most Wall Street professionals will have to wait another year for a rebound in year-end bonuses,” Alan Johnson, managing director of the firm, said. “For most… it will be another disappointing year.”

Of course, the issue is that most bankers think they’re the exception to the rule — and will be the outlier who gets compensated well. At the same time, many young bankers have inflated expectations after receiving record bonuses for the 2021 fiscal year.

New York Post / January 25, 2024