eFC Briefing: Rescue to Cushion Bonuses?
Johnson Associates' quarterly forecast sees year-end payouts down 20 - 35 percent on average, with senior executives taking bigger hits. Damage would have been greater without the bailout package.
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Bailouts and mergers will help place a floor under Wall Street bonus payments, limiting the damage to a smaller-than-expected 20 - 35 percent average decline this year compared with 2007, according to compensation consultant Johnson Associates. Its third-quarter bonus review and forecast sees the biggest pay declines hitting senior corporate executives (bonuses 60 - 70 percent below last year on average); fixed income pros (down 40 - 45 percent); and investment bankers (down 35 - 45 percent). High-net-worth private client bankers fare relatively well among the sectors Johnson lists: their 2008 bonuses are seen averaging 10 - 15 percent below 2007 levels. The report predicts bonuses throughout the banking and asset management sector will shrink further in 2009.
Separately, Peter Wuffli recently revealed he gave up a $10 million bonus he'd been entitled to receive after being ousted as chief executive of UBS in 2007. The Financial Times, which reported Wuffli's disclosure, says it will raise pressure on other former UBS executives to follow suit. The entire management board of Deutsche Bank, led by Chief Executive Josef Ackermann, have said they will waive taking bonus payments this year.
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TD Bank Financial Corp., parent of Toronto Dominion Bank, and its corporate cousin TD Ameritrade Holding Corp. are continuing to hire . At Toronto-based TD Ameritrade Holding, personnel expenses soared by 25.6 percent in the quarter ended Sept. 30, as the firm added sales and support staff. TD Bank also is hiring at the same levels as last year, a spokesman said.
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The hedge fund industry's former boomtown atmosphere and exorbitant compensation are becoming faint memories for many professionals. Amid mostly negative returns and unprecedented pressure from investors looking to withdraw money, "all bets are off right now around comp for hedge fund managers," says fund industry consultant Jane Abitanta, president of Perceval Associates. The average hedge fund was down 17.6 percent this year through Oct. 21, according to Hedge Fund Research. Some, particularly those funds in distressed styles or areas that use credit derivatives, are posting positive numbers, but mostly modest, single digits returns.
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While many financial market jobs are evaporating or experiencing severe reductions in compensation, public accounting continues to be healthy, with salaries increasing at high levels for experienced tax and audit professionals. A recently released 2009 Salary Guide from Robert Half International concludes CPA firms' demand for accountants remains steady. Demand is fueled by an overall shortage of qualified candidates and a large number of current and anticipated retirements of CPAs. Recruiters say premium pay is going to those who have experience in audit, SEC issues, forensic accounting or familiarity with International Financial Reporting Standards.
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A consulting firm's survey of investment managers last week found more say they're adding staff than cutting staff. FS Associates of West Orange, N.J., polled 70 asset management firms during the first week of November, according to Financial News. Twenty-five percent said they plan to add staff, while 20 percent said they cut or plan to cut positions. That contrasts with layoffs announced or being considered by Fidelity Investments, Legg Mason, Henderson and Schroders, among others, Financial News observes.
