Johnson & Associates predicted that bonuses would be down 5 to 15 percent for fixed-income traders; up 5 and 20 percent, respectively, for equity and equity derivative traders; and up 10 to 20 percent for investment bankers. Bonuses for corporate staff members, according to Mr. Johnson, will be flat to 5 percent up, and asset management will be getting increases of 5 to 10 percent. The Options Group predicted that fixed-income bonuses would fall 15 to 20 percent, and that equity and investment banking bonuses would rise 10 percent.Well, layoffs can have a similar effect to not paying bonuses. And, Morgan Stanley is the best place to be? Oh, right, that was written yesterday. We'll probably get a few more days of news before the bonuses are actually announced.
Thousands of bankers and traders in mortgage-related businesses have been laid off, shrinking the compensation pool. But failing to reward so-called producers can result in high-level departures.
Michael Hecht, a research analyst at Bank of America, says the best places to be for bonuses this year (in order) are Morgan Stanley, Goldman Sachs and Lehman Brothers; the worst are Merrill and Bear Stearns.
Seeking to conserve cash, banks may pay senior executives more of their compensation in stock than usual.
"We feel this year banks will use stock as a major currency to pay," said Michael Karp, chief executive of the Options Group. "We feel the stock totals will be as high as 60 or 70 percent," rather than the typical 50 percent.