Wall Street Is Offering Big Pay Increases to Amass a Crypto Army

“The banks can’t run the risk that their clients go to another bank to do these services, so they need to build up,” said Alan Johnson, managing director of Wall Street compensation consultancy Johnson Associates. “This is a big asset, a big opportunity, and they need people and need them in a hurry. They’re willing to pay a lot.”

And, as financial firms staff up, they have to compete with technology and crypto firms doing likewise — competition intensified by a scarcity of talent with both types of experience, recruiters said. That means a crypto job can be lucrative, with a related role at a bank commanding a 20% to 30% premium in total compensation over a comparable position at the same institution, according to Johnson.

Bloomberg / November 1, 2021


Senior Execs Staying Put While Waiting for Big 2021 Bonuses

“For the top five to 10 largest money management firms, 2021 has been a really good year and it’s unlikely that there will be a lot of changes among senior executives aside from normal retirements going forward,” said Alan Johnson, managing director at New York-based compensation specialist Johnson Associates Inc.

The firm’s estimate for 2021 incentive compensation for traditional and hedge fund money managers is an increase between 10% and 15%, while private equity incentive funding for megadeals likely will range from 15% and 20%, based on second-quarter earnings results of 10 managers.

Pensions & Investments / November 1, 2021


Wall Street Set to Shower Bankers with Highest Pay and Bonuses Since 2008 Crisis

“2021 will be a very strong year for investment banking and we anticipate firms paying bonuses that align with individual, group, and overall firm performance,” said Chris Connors, vice president at Wall Street compensation consultants, Johnson Associates.

While M&A and equity capital markets dealmakers will be the big winners, banks are unlikely to match bonuses to the stellar performance this year, he added.

“Banks typically overlay business unit results with overall firm results and we expect overall firm bonus pools to be +15% vs 2020. With that in mind, we expect incentives to increase 30%+ in equity underwriting and advisory,” said Connors.

Financial News / October 15, 2021


Incentive Pay Under Fire

Currently, there’s a greater focus by politicians and the public on income inequality, environmental issues, and diversity and inclusion, said Alan Johnson, managing partner at compensation consulting firm Johnson Associates. “I think those are not necessarily the traditional bank risk measures, but for a large, visible financial institution, they are going to be under more scrutiny, and it won’t be the traditional [risk issues such as] solvency.”

Rather than focusing on whether banks are lending to the wrong people or taking on unsustainable balance sheet risks, politicians are more likely to dig in on reputational risk and societal impact, Johnson said.

He expects a greater share of companies to introduce environmental, social and governance metrics, and particularly metrics having to do with diversity and inclusion, into their incentive plans for 2022. He said many companies are ascribing between 10% and 20% of annual bonuses to ESG.

Meanwhile, under rules by the Securities and Exchange Commission coming out of the 2007-2008 financial crisis, boards are required to probe compensation plans under their oversight duties with respect to enterprise risk management. For a large financial institution, most formal ERM reviews regarding compensation look at traditional balance sheet risk issues and the design of various incentive plans within the bank, Johnson said.

“The reputational risk is more at the executive level, and I think firms are trying to do that,” Johnson said. “The problem is, it’s a moving target…”

According to Johnson, well-designed incentive plans offer boards wide latitude to alter their course in the case of unexpected circumstances such as the pandemic, or reduce payouts when warranted. “If senior management messes up badly, they have the flexibility to pay dramatically less or fire them,” he said.

Agenda / September 20, 2021


Financial Services Employees May See Meaningful Compensation Increases by the End of the Year

“After being down dramatically earlier in the year, it looks like pay is going to be up nicely this year — double digits for some people,” Alan Johnson, managing director at Johnson Associates, told Institutional Investor. “I think that’s a pleasant surprise because it was somewhat unexpected.”

In the first half of the year, alternatives carried the asset management industry. In fact, private equity funds saw a five-percentage-point increase in projected 2021 incentive funding from 2020 expectations. The PE sector saw massive upticks in fundraising and realizations, which ultimately led to the increase in compensation, according to the report.

“In asset management, the stars are the alternatives,” Johnson said. “Particularly, private equity is the queen of the ball.”

Johnson said the end-of-year compensation boosts will garner a “so-so” reaction from employees in the mentioned sectors: “I think the people in the industry will feel the pay increases are nice, but with all the stress and work and disruption that’s going on, I think people will feel just OK.”

For junior talent, Johnson said the comp increases may not be enough to keep them in the business after a year of minimal recruiting, decreased retention, and complaints of feeling overworked.

Institutional Investor / August 9, 2021


Top Money Managers are in Bidding Wars Over Diverse Talent, Making Eye-popping Counteroffers to Land Candidates

Alan Johnson, managing director and compensation consultant at ​Johnson Associates, said that despite the big push from firms to hire more women and people of color, significant progress could be extremely slow — to the frustration of many.

“After 50 years of excuses, many people don’t want to hear any more excuses,” Johnson said.

But he thinks it will take years to see visible change in the industry, particularly at the leadership and senior level at money managers.

“You can’t create mid- to senior-level portfolio managers from scratch,” Johnson said. “It takes 10 to 15 years to get them to that level. And it will take a long time. If you don’t have that many people in your pipeline…unfortunately that’s going to be the reality.”

If firms can’t attract an influx of young minority professionals to the industry — as well as retain and develop them throughout their careers — the war for talent at the bargaining table won’t do much to improve the diversity picture on Wall Street.

And without a bigger-picture perspective, firms will still be vying for what may be a handful of minority professionals, particularly at senior levels, Johnson said.

Business Insider / August 5, 2021