Incentives Incoming

Wall Street Sees Banner Year For Bonuses

Largest year-end incentive awards since the Great Recession with biggest increases on tap for investment bankers and equities traders

According to the analysis from Johnson Associates, Inc., incentive payments to investment banking underwriters are projected to jump by as much as 35% while investment banking advisors and equities sales and trading professionals can expect to see awards increase 20% – 30%.

NEW YORK, Nov. 16, 2021 (GLOBE NEWSWIRE) — Year-end incentive payments on Wall Street are expected to surge to their highest levels since the Great Recession as most business segments in the financial services industry are benefiting from a sharp rebound in their businesses.

That’s according to a closely-watched analysis released today by Johnson Associates, Inc., a New York-based compensation consulting firm. The analysis estimates overall year-end incentives, which include cash bonuses and equity awards, will be significantly higher compared with last year when most professionals saw a decline in awards.

“This year’s bonus season on Wall Street should be one for the record books,” said Alan Johnson, managing director of Johnson Associates and one of the nation’s foremost authorities on Wall Street compensation. “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 On The Horizon

According to the analysis, incentive payments to investment banking underwriters are projected to jump by as much as 35% while investment banking advisors and equities sales and trading professionals can expect to see awards increase 20% – 30%. Double-digit increases are also projected for professionals at private equity and asset management firms, hedge funds, and those in management and staff positions. Retail and commercial banking professionals are projected to receive payments that will increase a modest 5%. Payments for fixed income sales professionals and traders are projected to be similar or slightly less compared with last year.

Johnson Associates regularly monitors compensation trends among a wide range of commercial and investment banks, asset management firms, and other financial services companies. Its quarterly compensation analysis is based on the firm’s ongoing monitoring of the financial services industry, numerous proprietary data points, and public data from seven of the nation’s largest investment and commercial banks and ten of the largest asset management firms.

Outlook for 2022

“Along with a positive outlook for the coming year, there is a growing concern for the retention of key talent. With elevated results come high expectations, coupled with a healthy, mobile hiring environment and a still undefined ‘new normal.’ Fortunately, the upward momentum moving into 2022 gives some, but limited runway for decisions with the looming macro pressures of increased inflation and interest rates and a perceived market bubble. For the intermediate term, companies should put at least some stakes in the ground to creatively align pay programs and workforce management with desired culture and compensation philosophy. To light the path forward, action items including the role and magnitude of base salaries, diversity and inclusion measures and goals, geographic compensation differences, and flexibility (on-site vs. remote) must be prioritized and communicated,” concluded Johnson.

Business AreaPercent Change from 2020
Investment Banking
(Underwriting)
30% to 35%
Sales & Trading
(Equities)
20% to 25%
Investment Banking
(Advisory)
20% to 25%
Private Equity (Mega)15% to 20%
Private Equity (Mid/Large)12% to 18%
Firm Management12% to 18%
Asset Management12% to 18%
Hedge Funds10% to 15%
High Net Worth10% to 15%
Staff Positions10%
Retail & Commercial Banking5%
Sales & Trading
(Fixed Income)
Minus 5% to flat

 

 

 

About Johnson Associates
Johnson Associates is a boutique compensation consulting firm specializing in the design of annual and long-term incentive plans and establishing appropriate market pay levels. The firm is well-known for providing candid advice and for its expertise and in-depth knowledge of the financial services industry, including major investment and commercial banks, asset management firms, hedge funds and other alternative investments, insurance companies, and brokerages. For more information, visit www.jaiconsulting.com

 

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