Published on ShanghaiDaily.com (http://www.shanghaidaily.com/)
http://www.shanghaidaily.com/sp/article/2008/200811/20081107/article_379727.htm
Top Wall Street execs to face bonus cutbacks
Created: 2008-11-7
Author:Christine Harper
THE most senior executives at Wall Street firms will have their bonuses slashed by as much as 70 percent, more than other employees, amid falling revenue and political pressure, according to a report by Johnson Associates.
Executives whose pay is disclosed in public filings will have the steepest reductions, while bonuses for other workers will drop by between 10 and 45 percent this year.
Rewards are likely to decline even more in 2009 as business slows further, said Alan Johnson, managing director of Johnson Associates, a compensation consulting firm.
A US$700-billion government bailout of the financial industry has led to calls from politicians, including New York Attorney General Andrew Cuomo and California Democrat Henry Waxman, for companies such as Goldman Sachs Group Inc and Morgan Stanley to justify year-end rewards, Bloomberg News reported.
That's likely to reduce pay for senior executives whose compensation is disclosed in proxy filings by more than that of other workers, Johnson said.
"The pressure from the politicians is intense," said Johnson. "You're going to be treated worse if you're in the proxy."
Goldman, which converted in September into the fourth-biggest bank holding company from the largest United States securities firm, said in its proxy filing this year that Chief Executive Officer Lloyd Blankfein received a 2007 bonus of US$67.9 million and that co-presidents Jon Winkelried and Gary Cohn each received US$66.9 million.
It was only last month that Goldman received US$10 billion as part of the government's US$700-billion bailout.
This year, banking executives would "get almost no cash and most of any incentive they get is going to get paid in either restricted stock or options," Johnson said. "It isn't going to be such a good deal to be in proxy statements. I think it's going to be a firestorm."
For workers whose compensation isn't disclosed, Johnson estimates that fixed-income investment bankers and employees would have bonuses reduced by 35 to 45 percent and prime brokerage departments would cut rewards by 15 to 20 percent.
Executives whose pay is disclosed in public filings will have the steepest reductions, while bonuses for other workers will drop by between 10 and 45 percent this year.
Rewards are likely to decline even more in 2009 as business slows further, said Alan Johnson, managing director of Johnson Associates, a compensation consulting firm.
A US$700-billion government bailout of the financial industry has led to calls from politicians, including New York Attorney General Andrew Cuomo and California Democrat Henry Waxman, for companies such as Goldman Sachs Group Inc and Morgan Stanley to justify year-end rewards, Bloomberg News reported.
That's likely to reduce pay for senior executives whose compensation is disclosed in proxy filings by more than that of other workers, Johnson said.
"The pressure from the politicians is intense," said Johnson. "You're going to be treated worse if you're in the proxy."
Goldman, which converted in September into the fourth-biggest bank holding company from the largest United States securities firm, said in its proxy filing this year that Chief Executive Officer Lloyd Blankfein received a 2007 bonus of US$67.9 million and that co-presidents Jon Winkelried and Gary Cohn each received US$66.9 million.
It was only last month that Goldman received US$10 billion as part of the government's US$700-billion bailout.
This year, banking executives would "get almost no cash and most of any incentive they get is going to get paid in either restricted stock or options," Johnson said. "It isn't going to be such a good deal to be in proxy statements. I think it's going to be a firestorm."
For workers whose compensation isn't disclosed, Johnson estimates that fixed-income investment bankers and employees would have bonuses reduced by 35 to 45 percent and prime brokerage departments would cut rewards by 15 to 20 percent.
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