eFC Briefing: Gloomier Bonus Projections
New York City officials see Wall Street bonuses shrinking more than 30 percent, while the state forecasts a more modest 20 percent pullback. In Chicago, risk management jobs are booming.
With 2008 past the halfway mark, the latest year-end bonus projections point to a plunge of more than 30 percent from 2007 - an even gloomier view than three months ago, when Wall Street was digesting the Bear Stearns fiasco. The New York Times reports both the New York City comptroller's office and Wall Street compensation consultant Alan Johnson see bonuses shrinking more than 30 percent this year, which would subtract some $10 billion from the local economy. Indeed, Johnson indicated his estimate of a 30 - 40 percent bonus falloff might be too optimistic.
New York Governor David Paterson's separate estimate of a 20 percent bonus drop appears still more optimistic. Paterson issued his prediction at a news conference last week, as reported by Reuters. He said that Wall Street's profit slump could cost the state $1.7 billion in tax revenue. While most U.S. states face budget shortfalls this year as the economic slowdown crimps tax revenues, New York appears more vulnerable than others due to its heavy reliance on the hard-hit financial sector.
As the credit markets continue to deteriorate and large financial institutions tighten controls, a number of Chicago firms are seeking risk management professionals in many specialties. "There are jobs and soon (there'll) be more," says Stuart Rosenthal, vice president of compliance at Legend Global Search, a New York-based recruiting firm that works frequently in Chicago. Demand for risk managers is counter-cyclical, and hiring is strong nationwide, recruiters say. Positions are open both within financial institutions and accounting firms that serve them.
Big-picture themes like globalization and regulation continue to produce opportunities for financial professionals, writes Andrea Kay, author of Life's a Bitch and Then You Change Careers: 9 Steps to Get Out of Your Funk and On To Your Future. In particular, companies in sectors like energy require people who can support overseas growth - specifically chief financial officers, treasurers, directors of risk, analysts, cash managers and accountants, Kay says.
Freddie Mac Chairman and Chief Executive Richard Syron received nearly $20 million in compensation last year, according to a filing with the Securities and Exchange Commission. He received a $1.2 million salary, along with a $3.45 million bonus, including $1.25 million to remain at the company, and $771,585 in other compensation. In addition, he received stock and options worth an estimated at $14.3 million, plus reimbursements for commuting and other expenses. Syron reportedly is guaranteed a minimum of nearly $9 million in stock regardless of performance if he remains at Freddie Mac through the end of 2008, and could receive far more.