Money Managers Attempt to Calm Layoff Fears Amid Downturn

But layoffs, “from moderate to severe,” will eventually occur at money management firms as a result of the market downturn and the “severe recession” that is expected to follow the pandemic, said Alan Johnson, managing director of New York-based compensation consultant Johnson Associates Inc.

Despite this, he has advised money management clients to not panic and “do sensible things” regarding decisions about their workforces.

“I know there will be stories of bad HR practices, and if you’re a business, you don’t want that headline,” Mr. Johnson said. In addition to negatively impacting company morale, sudden decisions about layoffs amid the pandemic may also carry legal implications, particularly if employees become or are sick, he added.

Pensions & Investments / April 3, 2020

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Coronavirus Fallout Could Cut Wall Street Bonuses as Much as 40%, Expert Says

“The virus is heading us toward a nasty recession,” said Alan Johnson, managing director of Johnson Associates in New York. His firm predicted banks, brokers and asset managers would slash bonuses this year, following a mixed performance in 2019, when private-equity firms held bonuses level or raised them as much as 5% over 2018.

The Wall Street Journal / March 26, 2020

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Coronavirus Stress Hits Wall Street’s Bonus Pool: Expert

Wall Street bonuses will fall roughly 30% this year, with even the most productive employees facing a pinch, as big banks and investment managers try to preserve profits during the coronavirus recession, a leading compensation expert said on Wednesday.

The predictions by Alan Johnson are closely watched by financial professionals, especially during times of stress. The global coronavirus outbreak has already hit markets hard as politicians have ordered huge swaths of the population to stay home and non-essential businesses to close, putting millions of people out of work…

“Now is the time to get rid of the people you probably should have gotten rid of before,” Johnson said in an interview. “The industry has been carrying some extra weight for a while.”

Reuters / March 25, 2020

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Wall Street Bonuses Could Fall 40% This Year in ‘Perfect Storm’

A “perfect storm” is taking shape, with a global recession looming and broader industry shake-ups coming as well, the managing director of Johnson Associates Inc. said.

“It looks like it’s going to be a very, very tough compensation year,” he said in an interview Wednesday. “This is a shock to the system that you see about every 10 years.”

…“The one silver lining is it’s going to change attitudes about working from home, which truthfully in financial services is long overdue,” he said.

Bloomberg News / March 25, 2020

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Here’s What Wall Street Bonus Season Means for Real Estate This Year

“We’re not having a flush year” as an industry, said Alan Johnson, managing director of Johnson Associates…

When it comes to real estate, Johnson noted the 2017 federal tax overhaul’s impact. He said the capping of state and local tax deductions has made living and working in New York City more expensive for many companies and individuals. Though the changes were first felt in 2018, Johnson said the fallout is only beginning now.

“It usually takes people two to three years to get their heads around [tax changes],” he said. He said several clients are looking at quietly relocating employees to Florida, Texas or Utah.

“New York is just very, very expensive,” he said. When it comes to wealthy financiers buying apartments, “why buy it here if you can buy it in Miami?” he asked.

Johnson did note, however, that there’s a bright spot for bankers compensated in equity in recent years. With bank stocks up, they could have “more money in their pocket than they thought.”

The Real Deal / February 14, 2020

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Frozen Wells Fargo Bonuses Show a Peril for Bankers After Crisis

The situation has swept up executives who haven’t been accused of any misconduct, according to the people, who asked not to be named discussing the confidential process. For denizens of the financial industry, it offers a cautionary tale about what can happen now that banks are diverting billions of dollars annually into stock awards to be doled out in the future…

“That’s the fear: You’re going to be at the wrong place at the wrong time — you didn’t do anything bad but you’re going to be judged in a politically, potentially arbitrary way,” said Alan Johnson, managing director of compensation consultant Johnson Associates. “It’s like nuclear fallout. The bomb didn’t drop on you but you were within five miles of it.”

Highly paid executives at banks typically received as as little as 30% of their earnings in the form of long-term compensation before the financial crisis — a portion that’s grown to 50% to 60% today, according to Johnson Associates. Wells Fargo’s top five earners received 72% of their pay in long-term awards by 2018, according to its most recent annual proxy statement.

Bloomberg News / February 6, 2020

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