Limits on Wall Street Pay Are Back on Regulators’ Agenda

When last proposed in 2016, the rules would have required the biggest financial firms to defer payment of at least half of executives’ bonuses for four years, a year longer than common industry practice. It also would have established a seven-year clawback period, in which executives would be required to return their bonuses if their actions hurt the institution or if a firm had to restate financial results….

Alan Johnson, a consultant who helps banks design their pay plans, said much of what regulators had hoped to accomplish with the pay rules is already a reality. Today’s bankers and traders are paid less than a decade ago, and banks have curbed the riskiest kind of trading and lending that drove losses during the meltdown.

“I think the regulators are going to refight a war they’ve already won,” Mr. Johnson said.

The Wall Street Journal / March 5, 2019

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Managers Answer Tough Quarter With Job Cuts

With volatility hurting returns, some traditional firms acting to address concerns over spending.

Most traditional managers saw their assets under management decline during the fourth quarter, a Pensions & Investments analysis of 24 publicly held money managers found…

Asset managers want to be “leaner and have faster decision-making, which means you can’t have too many people near the middle or top” of the organization, said Alan Johnson, managing director of compensation consulting firm Johnson Associates Inc., New York.

Mr. Johnson said recent cuts were “about what I expected, which is moderate adjustments to headcount.”

Pensions & Investments / February 18, 2019

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Revealed: The Difference in Pay at US and European Banks

US investment banks have been eating away at European businesses’ market share on their home turf since the financial crisis. In a bumper year for mergers and acquisitions fees in Europe, US investment banks had a 54.2% slice of the pie in 2018, according to data provider Dealogic, with European banks taking 41.4%. This is widest gap since the turn of the century.

“European investment banks lag their US rivals in both performance and pay, and the difference is getting larger,” said Alan Johnson, founder and chief executive of Johnson Associates, a remuneration consultancy.

Financial News / February 4, 2019

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Money Managers Face Reduced Margins in 2019

“For the last 20 years, it’s been a great business — probably too great,” said Alan Johnson, managing director, compensation consultant at Johnson Associates Inc., New York. “The shifts to lower fees mean asset managers have had to find other ways to maintain margin. … Earnings are likely to be down, with layoffs in the first or second quarter — and those will be technology-driven.”

Pensions & Investments / January 2, 2019

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Money Managers See Higher Bonuses This Year but Are Bracing for Job Cuts in 2019

Compensation will be strongest at firms that have the scale to maintain strong profits or the technology platforms to keep costs low, including managers that focus on passive products and exchange-traded funds.

Despite industry pressures, overall headcount increased in 2018 for both public and private managers, specifically in technology, product development and international markets. But this trend likely won’t last.

Next year, things are looking worse, with planned job cuts coming as soon as the first quarter of 2019.

“Unfortunately, the hiring trend is likely to be reversed in 2019. Many firms are already planning for reductions during the first quarter of 2019 through both attrition and terminations,” warns Francine McKenzie, managing director at Johnson Associates.

Business Insider / November 28, 2018

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Big Banks Are Moving Regulators Out of New York City

New York City has seen an exodus of banks’ back-office workers this year — and can expect to see even more shedding in 2019 — as weaker regulatory oversight has encouraged big deals and boosted profits to all-time highs.

Wall Street, which made a record $62 billion in profit last quarter, is hiring less-experienced compliance officers and back-office employees in places like Buffalo, NY, Salt Lake City and even Poland, as banks shed costs and keep rule-followers out of the hair of the pin-stripe-suit set…

It’s unclear how many people have been displaced, but automation and high costs of working in New York are expected to drive out even more next year, according to a report from Johnson Associates.

“People are looking harder than ever [at cheaper areas] — particularly with tax-law changes. It’s just kind of dumb to be here,” said Alan Johnson, chief executive of Johnson Associates.

New York Post / November 22, 2018

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