Wall Street workers’ bonuses could take a hit

Bonuses for Wall Street workers are expected to take a hit in 2022, according to a report released Thursday. While 2021 saw an impressive increase in bonuses, this year will not be as profitable.

According to the Johnson Associates report, incentive payments for those who subscribe to debt and equity could fall by over 45%. Meanwhile, those advising on mergers and acquisitions might see a smaller 20% to 25% drop in the performance fee.

“What’s unusual about this is that it comes so soon after a great year last year. On top of that, high inflation is hurting people’s compensation,” said Alan Johnson, chief executive officer of Johnson Associates, according to CNBC.

The report also points out that those involved in wealth management could see a 15% to 20% drop in performance bonuses. Private equity firms can cut performance-related pay by 5% to 10%, depending on company size. Hedge funds could also cut the performance fee by 15%.

“2021 has been a fabulous year and this is a real downer. We’ve had bonus declines before, but you overlay that with inflation through the end of the year, and I think it’s going to be particularly painful,” Johnson said.

There are three exceptions: bonus traders and sales staff might see bonus increases of 15% to 20%; Equity traders could see bonuses increase by between 10% and 20%, and traders of macro and quantitative companies could also see bonus increases of 10% to 20%.

While most of the current economic turmoil doesn’t directly affect Wall Street companies, that doesn’t mean they’re immune from the effects. IPOs have slowed significantly as investors tire of spending their money in uncertain economic conditions.

In the first six months of 2022, revenue for the top five Wall Street companies fell 43%. Given the current economic circumstances – inflation, slowing US economic growth and the Russian invasion of Ukraine – many customers are left on the sidelines.

Given the current economic circumstances, Wall Street firms are also less keen on paying big bucks for talent as they’re keeping a closer eye on spending. The report also predicts there could be some layoffs on Wall Street that could affect up to 5% to 10% of current Wall Street workers.

“You can expect announcements of layoffs over the next few weeks. There are no signs that things are going to improve in investment banking,” Opimas’ Octavio Marenzi said in July.

A report that Apple plans to cut spending helped fuel fresh recession fears on Wall Street
A report that Apple plans to cut spending helped fuel fresh recession fears on Wall Street
Photo: GETTY IMAGES NORTH AMERICA via AFP/JUSTIN SULLIVAN Wall Street workers’ bonuses could take a hit

Fry Electronics Team

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