Bonuses for Wall Street professionals are set for their largest increase since 2009 following an extremely profitable 2021, according to CNBC, citing pay consultancy Johnson Associates.
In particular, overall bonuses for investment banking underwriters are expected to jump 30% to 35% over last year, while investment banking advisors and equities traders can expect a 20-25% boost. Bonuses for private equity, asset management and hedge fund professionals are expected to see double-digit increases as firms shell out large premiums to both procure and retain talent.
Meanwhile, base salaries are also set to climb as heightened attention has been given to junior bankers. Goldman, for example, recently raised salaries for their entry-level investment bankers from $85,000 to $110,000.
According to Johnson Associates managing director Alan Johnson, firms are "very concerned about turnover, even though pay is going to be up significantly."
Johnson Associates used public data from banks and asset management firms, along with proprietary insights from clients, to calculate the projected year-end incentives on a headcount-adjusted basis. Some investment banks, including Goldman Sachs, disclose how much management has set aside for employee compensation in quarterly earnings reports. -CNBC
The last time bonuses increased this much was during the credit crisis, when 2009 saw bonuses jump 30% to 60% over the previous year.
"The business results this year have been outstanding," said Johnson, who expects to see activity remain strong enough to keep incentives elevated next year, though growth will likely slow.
"I don’t think [bonuses] are going to go up as much next year. … I think this was a spurt," said Johnson. "But the view is ’22 will be a really good year."
“Wall Street’s success during the pandemic has benefited New York’s economy and finances during a difficult time,” he said in a statement. However, cautioning that this bonanza will "subside at some point", and adding that "as we prepare for an eventual slowdown in Wall Street’s record activity, we need to ensure New York’s Main Street, and its other vital sectors, are also recovering.”