Wall Street bankers and traders used to a big fat bonus may have been surprised by their checks this year.
Bonuses for “front-office” financial professionals -- or bankers and traders -- declined 38 percent in 2012 from 2011, according to a recent survey from eFinancialCareers.com. Though their bonuses didn’t take as big of a hit, “middle-office” workers, like risk and compliance staff employees, saw their bonuses fall by 15 percent, the survey found.
The drop continues a trend of declining bonuses on Wall Street. Financial industry workers’ bonuses took a hit in 2011, with the average bonus falling to $121,150 from $138,940 in 2010. Wall Street staffers are suffering in other ways too; Morgan Stanley cut 6,000 jobs last year, according to the Wall Street Journal and Citigroup announced in December that it planned to slash 11,000 jobs.
Heightened scrutiny on Wall Street pay in the wake of the financial crisis has pushed many institutions to change their pay practices. More respondents than last year reported having their bonus deferred, according to the eFinancialCareers survey.
Morgan Stanley, for example, paid its bonuses in installments with the last coming in January 2016, according to the Wall Street Journal. The benefit of deferred compensation, proponents argue, is that it discourages staffers from taking big risks if they know their employer still owes them money.
Other banks have taken steps to rein in bonuses perceived as outlandish. Citi announced earlier this week that it would tie top executives’ bonuses more closely to to performance, according to The New York Times.