As the year winds down and 2021 comes to a close, the talks of year-end bonuses are inevitably coming about, and Wall Street staffers are in for the highest bonuses since 2009. It has been a busy year for business compared to last year’s lackluster performance, where professionals saw a decline in awards. “Investment bankers and equities traders are in line for the biggest bonuses,” compensation firm Johnson Associates Inc said on Tuesday.
Overall, it’s been a good year for business, with incentives seeing a significant spike compared to last year. These incentives include cash bonuses and equity awards which declined in the previous year as well. The awards reflect record levels of deal-making and trading activity as government stimulus measures helped propel global stock markets to all-time highs.
Investment banking underwriters are projected to see a jump in bonuses by as much as 30%-35% this year compared to the prior year, while investment banking advisers and equities sales and trading professionals can expect to see awards increase by 20%-30%, as research dictates.
“This year’s bonus season on Wall Street should be one for the record books,” said Alan Johnson, managing director of Johnson Associates Inc. “Virtually all financial services industry segments, including investment banking, asset management and alternative investments, are performing at record levels. This, in turn, will translate into incentive award increases we haven’t seen in the industry since before the Great Recession.”
Double-digit increases are projected for workers at private equity and asset management firms, hedge funds, and those in management and staff positions. Retail and commercial banking workers, however, are projected to receive payments that will increase a more modest 5%, the study shows.
Payments for fixed income sales professionals and traders are projected to be similar or slightly less compared with last year. The busy and profitable 2021 is often attributed to booming deal activity, a hot IPO market and climbing equities which means bankers and traders are in line for outsized performance-based compensation.
However, given this year’s tremendous business activity, Wall Street professionals have seen an increase in unprecedented workloads. This also translates to a more competitive job market as companies prepare to shell out a premium to retain top talent and nab new hires. Firms are “very concerned about turnover, even though the pay is going to be up significantly,” Johnson Associates managing director Alan Johnson told CNBC.
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 head-count-adjusted basis. Some investment banks, including Goldman Sachs, disclose how much management has set aside for employee compensation in quarterly earnings reports. Johnson Associates also predicts bonuses for private equity, asset management and hedge fund roles will see double-digit increases.
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