According to a new report from compensation firm Johnson Associates Inc, staffers on Wall Street are set to earn the largest bonuses seen in the U.S. since 2009. Investment banking underwriters and advisors, and equities traders are expected to see the biggest end-of-year bonuses with year-over-year increases of between 20% and 35%.
"Virtually all financial services industry segments, including investment banking, asset management and alternative investments are performing at record levels," the report reads.
2020 was a down year for Wall Street bonuses thanks to struggling markets, but 2021 recovery measures have more than made up the difference. This year, government stimulus efforts boosted the global stock market to new heights, and record levels of trading activity have resulted.
The projected higher bonuses reflect that increased market activity as well as a rebound from the lower bonus awards of 2020. Bonuses are announced in January and paid out in February.
"This year's bonus season on Wall Street should be one for the record books," managing director of Johnson Associates, Alan Johnson, told Reuters. "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."
Johnson told reporters that a competitive hiring market has also contributed to pushing pay and bonuses higher.
The report did not include any data regarding how large bonuses are expected to be, but Wall Street bonuses often fall in the hundreds of thousands of dollars. Some analysts expect successful traders to make multi-million dollar bonuses.
On average, Goldman Sachs
"It's obviously true that we pay for performance. And in light of the very strong performance over the last couple of years in both banking and markets, we have seen increased compensation expense," JPMorgan Chase
Most but not all Wall Street workers are expected to see double-digit bonus growth over 2020. While bonuses for managers and staff at private equity firms, asset management firms, and hedge funds are projected to increase by 10% or more, retail and commercial banking workers are expected to see increases of around 5% over last year.
Fixed income sales professionals and traders are likely to see bonuses at the same level or lower than those they received in 2020.
In 2009, Johnson reports that bonuses on Wall Street increased by between 30% and 60% as they rebounded from the Great Recession.
