THIS ARTICLE HAS BEEN UPDATED – READ THE MOST RECENT VERSION HERE.
Goldman Sachs, JPMorgan and Morgan Stanley have announced their bonuses for 2011. Bank of America is about to announce. Others are coming, soon.
This is where we’ll let you know what we’re hearing about this year’s bonus round. This page will be updated every few days and shifted to the top of the article list for ease of access.
For the moment, we have the information below for the banks that have announced. For the banks that have yet to announce, we’re hearing the following rumours:
– BarCap’s said to be thinking of capping cash bonuses at £70k for directors and £125k for MDs
– Deutsche may cap cash bonuses at €80k
– Bank of America may pay a lot of unrestricted stock instead of cash as a way of improving its capital position.
1. Morgan Stanley
Cash bonus cap? Yes. Cash bonuses are capped at $125k (£81k). Cash bonuses are reportedly being paid in two equal instalments in the final months of 2012 and 2013. This is better than the previous plan, in which Morgan Stanley’s cash bonuses were deferred over 18 months.
Mitigating features: Any Morgan Stanley bankers earning up to $250k (£163k), will receive all their compensation in cash.
Deferrals? Junior deferrals said to be capped at only 25% after complaints last year. Recruiters confirm this, saying associates at Morgan Stanley are only having 20% of their comp deferred.
Overall, Bloomberg reports that the deferral rate for 2011 at Morgan Stanley has been increased to 75%, up from 60% last year and 40% in 2009. Restricted stock vests over three years.
Amounts: Compensation and benefit costs in Morgan Stanley’s institutional securities division (investment bank) actually rose 3% last year. However, James Gorman stressed that this was partly due to previous years’ deferrals. Morgan Stanley is said to be reducing pay for senior bankers and traders by 20-30%.
Unhappiness quotient: 5. Anecdotally, Morgan Stanley’s bankers aren’t that happy but nor are they that unhappy. The bank’s seen as doing a good job of expectation management.
2. Goldman Sachs
Cash bonus cap? Apparently not. However, last week there were rumours that Goldman was planning to cap London salaries at £100k. According to the Wall Street Journal, more than half Goldman’s employees globally earn base salaries of less than $100k (£64k). During last week’s conference call, David Viniar indicated that cash bonuses are down substantially at Goldman this year.
Mitigating features: Goldman had been paying salaries that were considerably higher than its rivals. Unfortunately, it’s now reducing these. In November last year, there were rumours of Goldman VP’s salaries being cut 40%.
Deferrals? The Wall Street Journal reports that Goldman “staffers’ aren’t allowed to cash in stock awards for five years. This seems a long time and hasn’t been confirmed elsewhere. To make matters worse, it says Goldman’s stock awards were priced at the close of trading on Thursday, after the stock had risen 6%, thereby preventing recipients benefiting from the cheaper strike price previously.
Amounts: Overall, Goldman’s compensation pool was down 15% this year to an average of $367k per head. However, a significant proportion of this consists of deferrals from previous years.
Unhappiness quotient: 8. Goldman bankers seem to be the unhappiest so far. “Pay is down 40% across the trading floor,” says one fixed income headhunter. “There are loads of zeroes and a lot of unhappy people.”
Cash bonus cap: Apparently not
Mitigating features: Rumours of very low deferrals at a junior end, with VPs earning £75k bonuses only having 10% deferred.
Deferrals? At other levels deferrals also seem to be low. First figures suggest JPMorgan’s bankers are only receiving 25% of their bonus in stock up to $1m, with 35% in stock thereafter. If true, this is clearly a lot more generous than Morgan Stanley. People with 35% deferrals are said to get 50% in the 2nd year and 50% in the third year.
Amounts: Compensation per head in JPMorgan’s investment bank was down 8% vs. 2010, to $341k. Again, this will include deferrals from previous years. In London, early reports suggest bonuses are down 20-35%, with high performers paid flat on last year.
Executive compensation: Jamie Dimon received a stock bonus of $17m, in line with last year. His cash bonus is said to have fallen to $4.5m from $5m, but this was offset by an equivalent rise in his base salary to $1.5m.
Unhappiness quotient: 5. Like at Morgan Stanley, the sentiment at JPMorgan seems neutral: people aren’t that unhappy. Nor, however, are they all that happy.