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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Wall Street Bonuses to Shrink as Much as 30 Percent Amid Coronavirus

It’s going to be an ugly bonus season on Wall Street…

“It’s going to be a second kick,” the report’s author, Alan Johnson, told The Post. “You had a hellish year and your pay is going to be down.”

The pain will not be felt equally on Wall Street, Johnson adds.

“There’s going to be a wide disparity between the people who got it right and the people who got it wrong,” Johnson warns.

New York Post / May 13, 2020

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Wall Street Bonuses Set to Fall By as Much as 30% in 2020: Report

Wall Street bonuses for 2020 could fall by as much as 25%-30% due to the deep cuts to revenues recorded by banks and hedge funds earlier this year as a result of the novel coronavirus, according to a report published Wednesday by compensation consulting firm Johnson Associates Inc.

While most compensation is expected to be down, 2020 is likely to be a year with “wide, wide variations in incentive outcomes between stronger and weaker competitors,” according to the report by Alan Johnson, whose predictions are closely watched by financial professionals.

For Wall Street professionals, most of whom are working from home, bonuses make up a significant percentage of their annual pay, and many have been fearing big cuts.

The New York Times / May 13, 2020

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Manager Bonuses Expected to Fall 20% to 25% Amid Pandemic

Money management professionals can expect to see a 20% to 25% decrease in year-end bonus payouts from last year, said projections from compensation consultant Johnson Associates.

Johnson Associates’ quarterly analysis projects broad and substantial decreases in incentive compensation across financial services. Incentive compensation for asset management is expected to be down broadly, with the coronavirus pandemic magnifying the ongoing challenges of many firms. Fees are down and revenues are declining as a result of the pandemic.

Pensions & Investments / May 13, 2020

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Hedge Fund Bonuses Could Slide 15% to 20%: Comp Consultant

The rest of this year is likely to bring “a greater dispersion” than ever before in pay and performance for hedge fund professionals, says Alan Johnson, managing director at compensation consultancy Johnson Associates. Many clients are already modeling lower pay levels, he adds.

“The average hedge fund pay incentives will be down 15% to 20%,” he says. “This will be noticeably down. But again, there will be a handful of winners.”

Hedge funds are unlikely to implement pay cuts now because they want to send a message that they are stable and secure, and because base salaries usually make up a small part of pay compared to year-end bonuses, Johnson says. Additionally, most firms are facing the “the double impact” of an already stressful business environment as well as the current Covid-19 situation, he says.

“It’s going to be a real balancing act for morale… It’s going to be really tricky this year,” Johnson says. “Giving a hug does not come naturally for most of these firms.”

There is likely to be greater movement across hedge funds this year to compensation models driven by profits and losses, as opposed to other factors such as recruitment or business development, Johnson says.

“There is a movement toward more objectivity and formula,” he says.

Some firms are also discussing if they need to have offices scattered across the globe if they have only a handful of employees in those locations, he adds.

“It’s going to be a year-end like no other for hedge funds,” Johnson says.

FundFire / April 29, 2020

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