Wall Street bonuses to rise 15 pct this year - consultant

NEW YORK Sat Mar 23, 2013 10:30am IST

A trader smiles as he works on the floor of the New York Stock Exchange after the closing bell in New York November 11, 2011. REUTERS/Lucas Jackson/Files

A trader smiles as he works on the floor of the New York Stock Exchange after the closing bell in New York November 11, 2011.

Credit: Reuters/Lucas Jackson/Files

Related Topics

Stocks

   
Rajalakshmi (C), 28, smiles after winning the Miss Wheelchair India beauty pageant in Mumbai November 26, 2014. REUTERS/Danish Siddiqui

Miss Wheelchair India

Seven women from across India participated in the country's second wheelchair beauty pageant, which aims to open doors for the wheelchair-bound in modelling, film and television, according to organisers  Slideshow 

NEW YORK (Reuters) - Bonuses at Wall Street firms will rise 15 percent this year despite ongoing pressure from investors, regulators and politicians about compensation levels, according to compensation-consulting firm Johnson Associates Inc.

The projected rise in pay would come after a 5 percent increase in 2012, which was considered "disappointing," Alan Johnson, head of the firm, said in a presentation to the Wall Street Compensation and Benefits Association that was released publicly on Friday.

Johnson expects chief executives to receive pay packages of $12 million to $25 million, even as investors question what they perceive as a misalignment between performance and pay.

"Overarching frustrations (and) questions remain unsolved," Johnson said. Among those questions are, "What is the appropriate balance between employees and shareholders?" and "Why can't incentives go to zero?" he added.

Johnson's projections - based on his work with banks, brokerages and asset management firms - are closely watched on Wall Street, particularly as compensation remains a hot-button issue for investors and taxpayers alike.

Since the onset of the global financial crisis in 2008 - and the ensuing backlash against bonuses paid to employees of bailed-out banks - the industry has made several changes to compensation plans. Base salaries have gone up, while more pay is deferred with clawback provisions to protect banks if deals that seem profitable at first eventually go awry.

A new "say on pay" measure that allows U.S. shareholders to vote on pay packages awarded to senior executives has also had an impact on executive compensation. Last year, Citigroup Inc (C.N) shareholders embarrassed the bank by voting down former Chief Executive Vikram Pandit's pay. The bank has since made changes to its compensation practices for top executives.

The European Union and Switzerland have also approved compensation caps that limit banker pay to a certain portion of base salary.

Yet those provisions have failed to prevent banks from paying out higher bonuses, even in years when performance suffers. Credit Suisse Group AG (CSGN.VX) gave its CEO a big raise last year, even though its profits fell.

The median bank or asset manager paid out a greater portion of revenue to employees in 2012 than they did the previous year, Johnson Associates said. That rise comes despite staff cuts last year at most major financial-services firms.

Payouts of deferred compensation from prior years skews those figures higher, according to the presentation. It is difficult to tell on a firm-specific basis how much of a compensation expense pertains to prior-year awards, because most firms do not disclose those figures.

The lack of transparency about how compensation and performance are linked will continue to hurt banks this year, Johnson said. (Editing by Bob Burgdorfer)

FILED UNDER:

Online Grocery Shopping

REUTERS SHOWCASE

Vodafone Tax Dispute

Vodafone Tax Dispute

India advised against challenging Vodafone tax ruling - source  Full Article 

Banking Sector

Banking Sector

India's laggard state lenders face tough sell on capital raising plan  Full Article 

Trade Deal

Trade Deal

WTO postpones trade deal by a day after last-minute objection.  Full Article 

Falling Oil Prices

Falling Oil Prices

Saudis signal no push for oil cut as market to "stabilise itself"  Full Article 

Raising Stake

Raising Stake

Nippon Life to raise stake in Reliance Capital fund unit  Full Article 

Sterilisation Camps

Sterilisation Camps

Sterilisation targets remain in all but name, critics say  Full Article 

Share Buyback

Share Buyback

Samsung Electronics to buy back $2 billion in shares  Full Article 

Microsoft in China

Microsoft in China

Microsoft to pay China $140 million for 'tax evasion'   Full Article 

Flashback: 26/11

Flashback: 26/11

The three-day attack in November 2008 left 166 dead.  Slideshow 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage