Wall Street is reportedly one step ahead of the Obama administration's plan to scrap some of the Bush tax cuts on the nation's top earners.
Banks are considering paying annual bonuses early this year to lessen the impact of the increased tax rates expected in January, when bonuses are traditionally paid out, reports the Wall Street Journal.
Rumors of the hurry-up bonuses on Wall Street come on the heels of Credit Suisse's reported plan to pay 400 managing directors in its London office a cash reward next month in lieu of a chunk of their 2009 bonuses. The bank's aim, according to a Bloomberg report, was to spread the cost of a one-time 50 percent tax levied on bank bonuses in the U.K.
The WSJ has more on Credit Suisse's move:
"Managing directors at Credit Suisse Group in London learned last Wednesday that they would receive a late-summer reward that will restore at least some of the money they sacrificed last year when the bank cut payouts in response to the one-time U.K. bonus tax. The bank will pay a midyear bonus on Sept. 1 in the form of cash that the bankers can't take home until 2012 or 2013..."
In the U.S., Wall Street firms typically wait until after the end of the year to pay out bonuses tied to performance over the previous 12 months. Bonus payments, which are often several times larger than an employee's annual salary, make up the lion's share of a bank's payroll expense.
The hurry-up bonuses can be seen as good leadership that boosts employee morale and protects employees from burdensome tax hikes. But Jena McGregor at the Washington Post's blog on corporate leadership says that accelerating compensation perpetuates a culture of greed.
What do you think?