Private-Equity Leaders Tout Industry Comeback, but Hiring Lags

Many private-equity firms are “a bit heavy on head count” after more than a decade of continual growth and hiring, said Chris Connors, a principal at Wall Street compensation consultant Johnson Associates.

Now some firms are focused on “curtailing expenses and cost management,” in some cases by replacing senior with junior employees or not filling openings when workers leave, Connors said.

The Wall Street Journal (WSJ Pro Private Equity) / May 28, 2024

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Chief Underwriters Underrepresented Among Highest-Paid Execs at Big Commercial Carrier

“As businesses have become more diversified and global, some of the non-revenue-generating roles at insurers and other large financial services companies have gotten significantly larger and you’re seeing this manifest in proxies,” said Chris Connors, a principal at compensation consulting firm Johnson Associates. These roles often include chief legal officer, chief technology officer, chief operating officer and even chief asset management officer at some companies, he said.

P & C Specialist / May 15, 2024

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Bonuses Seen Soaring for Bond Desks, Traders in Early Prediction

Bankers who underwrite debts may see payouts swell as much as 25% as deals pick up this year, according to a report Tuesday from compensation consultant Johnson Associates Inc. For bond traders and equity underwriters, incentives may rise 20%.

“In general, employees in financial services should be pretty pleased: The amount of money they earn will match the results,” Alan Johnson, the firm’s managing director, said in an interview. “If you are in a business that manages costs, and generates significant profits, pay will follow along.”

Financial industry bonuses last swelled so much when the pandemic set off a tidal wave of trading and dealmaking. But that proved temporary, leading to “unrealistic expectations” among employees about future compensation, and then disappointment in the years that followed, Johnson said.

“This should be more sustainable growth, as businesses move ahead at a moderate rate,” Johnson said.

Beyond wealth management, people working in asset management may see a bump of about 5% on the back of market appreciation. At hedge funds, incentive compensation is also likely to be up 5%, helped by returns and inflows.

“Fifteen years ago people thought financial advisers were the dinosaur, which has made a full recovery, and is now a business people want to be in, with steady fees and diversified clients,” Johnson said.

Bloomberg / May 7, 2024

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Wall Street Bonuses to Rise This Year as Deals Return, Says Report

Bonuses are poised to recover on Wall Street this year, fueled by strong equity market gains and recovery in investment banking, according to financial services compensation firm Johnson Associates.

Investment bankers helping companies issue debt are expected to have the highest raises in bonuses this year, from 15% to 25%, as companies sell record volumes of debt.  As initial public offerings come back, bonuses for equity underwriters are expected to rise 10% to 20% this year.

“We are seeing almost all segments on Wall Street raising compensation”, said the firm’s founder Alan Johnson. “This should be a good year, although there are risks stemming from elections in the U.S. and global conflicts”.

Although improving, incentives in investment banking are still far from their peak in 2021. The only segment where pay is above the 2021 level is private equity, but the workforce at these companies is considerably smaller than in banks, Johnson said.

Reuters / May 7, 2024

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FTC’s Non-Compete Ban Could Lead to ‘Draconian’ NDAs, Non-Solicit Agreements

Asset managers typically use non-competes when hiring certain C-suite executives, portfolio managers and other “high-end” roles, especially in technology and alternatives, said Alan Johnson, a managing partner at compensation consultancy Johnson Associates. It is also fairly common for top distribution, sales or product development leaders to have non-compete agreements, as reported.

The ban may also cause shops to think twice about lift-outs or recruiting talent to start new strategies. “I can’t even really tie you down,” said Johnson. “I’m going to pay you to develop this product and you go compete with me tomorrow?”

The FTC noted that employers already have trade secret laws and non-disclosure agreements at their disposal to protect sensitive information, and that more than 95% of workers with non-competes also have an NDA.

Still, such non-disclosure and non-solicitation agreements may get more “elaborate,” said Johnson the comp consultant. “[Y]ou’re going to have to be draconian,” he said.

Firms may also consider shifting certain roles overseas as a workaround, while stipulating in contracts with new hires that the firm has a right to move the employee, he added.

FundFire / April 29, 2024

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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

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