If the bonus season made a fashion statement, color it gray

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Let’s face it. The forecast for this year’s bonus season is downright gloomy. And judging by eFinancialCareers' most recent survey on the subject, most financial professionals were not surprised.

Like we do every year around this time, eFinancialCareers took a look at the year-end payouts that begin in December and last on through February by surveying Wall Street professionals who are bonus-eligible and know the amount of their annual bonus.

Nearly half (45 percent) of more than 1,000 financial markets professionals surveyed said their bonus met their expectations while one in 10 (11 percent) said they did better with their bonus than they expected.

In fact, only just over a third (35 percent) said they were disappointed and indicated their payout had missed their expectations. And it is these unhappy souls about which Wall Street firms are most concerned.

Our research found that one in three (32 percent) of those who were disappointed had actually performed well and saw their bonuses rise year over year. They just didn’t rise nearly enough as far as these star employees were concerned.

Part of this disappointment was obviously due to their company’s overall performance and a number of Wall Street firms saw revenues plummet, especially in their investment banking divisions.

Some firms, such as UBS, have slashed investment-banking bonuses by 60 percent this year. The head of UBS investment banking didn’t receive any bonus at all, but then why should he if the unit lost money following a trading scandal last September that cost the bank $2.3 billion? Goldman Sachs has cut bonuses in half for its star performers, but then it saw earnings fall 58 percent.

“It’s hard to overcome firm performance with personal performance in the yin and yang of pay for performance culture,” said Constance Melrose, Managing Director, eFinancialCareers, North America. “Firms loathe losing top performers, and approach every bonus season concerned that murmurs of dissatisfaction escalate.”

This year we saw a shift upward in the earnings levels of this disappointed group to include financial markets professionals whose salaries top $200,000. Last year’s discouraged group registered lower salary levels.

“Every professional working on Wall Street has a number,” said Ms. Melrose. “Sometimes the number is long-term, such as how much do I need to make before retirement? But there’s an annual number too – a useful marker of professional value to your current employer."

Because of all the layoffs taking place, some firms may not be afraid of retaining their disappointed rainmakers. Morgan Stanley CEO James Gorman is famously quoted as chiding his bankers to stop whining about their slashed bonuses and that if they’re not happy they should just leave.

“It doesn’t pay to underestimate the moxie and ingenuity of financial markets professionals in finding the path to maximizing opportunity,” said Ms. Melrose. “No one wants to hear about the ten-bagger they let get away.”

Combine the euro-zone crisis, the skyrocketing U.S. debt and an uncertain global economy, the near term future for investment banking doesn’t look too promising.

Among some of the banks cutting compensation for investment bankers are Barclays, Deutsche Bank, Morgan Stanley, Bank of America/Merrill Lynch and Lazard, with cuts ranging from 30 percent to 10 percent.

“Managing compensation expectations is one of Wall Street’s premier arts,” said Ms. Melrose.

If you were expecting to get your bonus in cash, you probably shouldn’t be working at a bulge-bracket bank, many of which paid out most of their bonuses in stock and stock options, with certain restrictions. Boutique firms and hedge funds on the other hand reportedly paid on average a higher portion of their bonuses in unrestricted cash.

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