Don't shed a tear for seemingly cash-strapped Wall Street workers this year. This year's bonus season may, in fact, be surprisingly rewarding. Banks have been working to devise ways to boost overall employee compensation while maintaining the appearance of pay cuts, the Wall Street Journal reports.
Goldman Sachs, which posted a $13 billion profit for 2009 and has been under intense scrutiny all year, has reportedly already announced bonus amounts to partners, directors, analysts and vice presidents. Many Goldman employees, according to the Business Insider, are actually quite thrilled about their compensation structure, which includes larger stock awards, smaller cash payouts -- and, for some, more take-home pay. Here's John Carney:
Partners this week were told that their 2009 bonus will be paid 60% in stock that will vest over 3 years. Several partners we spoke to seemed happy to get Goldman stock instead of cash.
"Cash loses value over time, while Goldman stock gains," one partner said.
Goldman Sachs, Royal Bank of Scotland and UBS AG have also offered some employees loans on the company dime. At other banks, including Citigroup and Bank of America, some workers are reportedly set to receive stock grants that can be sold "within months," the WSJ notes. These fast-track stock options run counter to much of the underlying principles behind reforming Wall Street pay. A host of critics and economists have called for tying bank pay to long-term performance, rather than short-term gains.
Here's more from the WSJ:
Some banks are easing the restrictions on restricted stock, making the shares nearly as liquid as cash. At Bank of America, restricted stock being distributed at the investment-banking unit can be sold as soon as August. Citigroup is issuing $1.7 billion of stock units that employees can sell in April.
Banking regulators globally have encouraged banks to make their pay deferral periods longer, at least a year or more.
Of course, flooding the financial markets with thousands of new shares of bank stocks is bound to have its consequences. As the WSJ reported recently, banks' shift to doling out bigger portions of pay in stock could hurt Main Street investors: "Some analysts estimate the shift to more stock could increase the number of shares outstanding at such companies by as much as 4%. All those new shares would dilute per-share earnings."
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