Wall Street Banker Bonuses Forecast to Rise 35% This Year

Bonuses for Wall Street’s investment bankers are forecast to jump as much as 35% this year – although experts have warned that payouts could be knocked by stock market volatility and an economic slowdown in the US.

Investment bankers who work in debt underwriting are expected to see the biggest rise, with bonuses forecast to soar 25% to 35%, after a jump in the number of companies and governments issuing investment-grade bonds in the first half of the year.

Equity underwriters, who help issue fresh company shares, are close behind, with the New York-based pay consultancy Johnson Associates predicting a 20% to 30% rise in bonuses after a jump in stock market listings.

However, Johnson Associates warned that payouts could be affected if market and economic conditions falter in the final six months of the year. “Recent market volatility and potential softening of the economy is leading to questions on the momentum going into the second half,” it said.

The Guardian / August 9, 2024

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Wall Street’s 2024 Bonuses Will Be Higher — If the Market Behaves

Following strong second-quarter results, professionals in almost all corners of finance are estimated to receive bonuses as much as 35 percent higher than they did last year, according to a report by Johnson Associates, the New York-based compensation consultancy.  Investment bankers have the most to look forward to. Debt underwriters could get year-end bonuses that are 25 to 35 percent larger than those awarded in 2023. Equity underwriters could get between 20-30 percent more compared with last year.

Payouts to eligible employees at traditional and alternative asset managers aren’t growing at the same rate. Bonuses at traditional managers are estimated to be up 5 to 10 percent while those at alternative managers are likely to remain flat or be boosted 10 percent or more. Even though the S&P 500 has gained more than 12 percent this year, stock performance is not translating into bonus payouts like it did in the past.

The explanation is straightforward: Passive products and pressure on fees have made much of traditional asset management less lucrative. “There’s not that clear linkage that there was before,” Alan Johnson, founder of Johnson Associates, told Institutional Investor. Meanwhile, the fees charged by alternative managers — that Johnson and other observers years ago expected would eventually go down — have been “remarkably” stable, he said.

While bonuses are broadly up year-over-year, overall they were down in 2023 and inflation has been higher since then, Johnson explained. Not every professional can expect as big of a reward this year; commercial and retail banking bonuses are estimated to be flat or down slightly.

Firms are always weighing how much to reward top performers and other must-keep employees at the expense of others who could feel slighted. In some cases, they want to cause some attrition by sharing less of the spoils with personnel they decide they could do without, Johnson said.

Payouts for 2024 would be announced and paid out at the beginning of next year. A lot could happen between now and then.

“The second half of the year may be more volatile and uncertain. And while the recent stock market selloff won’t immediately offset the results already in the books, longer-term concerns such as employment, interest rates, and political developments could move the needle,” the report says.

Institutional Investor / August 8, 2024

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Wall Street Bonus Watcher Says Some Payouts Will Jump Up to 35%

After two lackluster years, Wall Street bonuses are poised to jump in virtually every sector of the industry, with debt underwriting likely to be the biggest winner.

Bankers who help companies sell debt may see payouts swell as much as 35%, as deals pick up and capital markets rebound from multiyear lows, according to a report Thursday from compensation consultant Johnson Associates Inc. Equity underwriters are close behind, with gains of as much as 30% predicted.

Bloomberg / August 8, 2024

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Bonus Outlook for Commercial Insurance Execs at Midyear

Bonuses at these [commercial] carriers are likely to trail other sectors in financial services, which are likely to increase in the range of 5% to 20%, according to Alan Johnson, founder of Johnson Associates, a compensation consulting firm…

Another challenge, when it comes to compensation is that some insurance companies are more diversified than others, Johnson said.  More diverse firms may have asset and wealth management units, or less cost-intensive insurance products, such as dental / vision insurance and supplemental benefit policies.  They may offer retirement products and have other nontraditional business lines as part of the broader organization.  This means that over time, there will be more diversity in terms of bonuses at firms based on their business mix, which can create cultural issues and jealousy, Johnson said.  “Those are some of the challenges that the industry is going to have more of as it goes forward.”

P & C Specialist / July 22, 2024

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Salaries for Masters Graduates in Finance Sector Power Ahead

Chris Connors of Johnson Associates, a New York-based financial services remuneration consultancy, notes that the surge in earnings was also seen in his firm’s data. He says it was caused by higher initial pay amid fierce competition for recruits, subsequent increases linked to high inflation and a recent rise in bonuses after two stable years.

“The sector was hiring like crazy and the war for talent was very pronounced, with way higher turnover,” he says. “Since 2021, base salaries have risen far more than historical rates in financial services.”

Financial Times / June 16, 2024

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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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