Wall Street bonuses to rise moderately in 2012: pay consultant
08/16/2012| 05:19pm US/Eastern
(Reuters) - Bonuses are expected to rise at a "moderate" pace across Wall Street this year, with senior executives getting up to 10 percent increases, according to a report on Thursday by the compensation consulting firm Johnson Associates.
Trading divisions are likely to be the biggest bonus winners this year, according to the firm's estimates. Bond traders are expected to see bumps of 10 to 20 percent, while equities traders should see hikes of 5 to 15 percent, Johnson Associates said.
The firm predicted that bonuses will be stable at a minimum for all business lines except investment banking, where dealmaking revenue has been going through a tough patch. There, Johnson Associates estimates that bonuses will range from a 10 percent drop to a 5 percent increase.
Of eight investment and commercial banks for which Johnson Associates projected 2012 pay, it expects just two to report lower overall bonus pools than the previous year. The firm predicted that bonuses will remain flat for five out of 10 asset management firms it covers, and drop for just one.
Senior executives are likely to get bonuses at least equal to last year's payout, and up to 10 percent higher than 2011, Johnson Associates said. Those estimates exclude executives whose pay is detailed in proxy filings, because of public pressure to keep a lid on Wall Street pay.
The consulting firm also predicted that recent scandals on Wall Street will weigh on compensation at individual firms that are caught in the headlines.
For instance, Barclays PLC agreed to pay more than $450 million in June to settle allegations that it fixed the London Interbank Offered Rate, known as Libor. More than a dozen other banks are being investigated by regulators for possible Libor manipulation.
JPMorgan Chase & Co has also been in the headlines for a bad derivatives bet may cost the bank at least $6 billion, while Knight Capital Group Inc required an industry rescue after bad software coding led the firm to post a $440 million trading loss.
"Libor scandal, errant trades, and other high profile errors and losses weighs on an already hampered investor confidence, and payouts of firms experiencing specific issues," Johnson Associates said.
(Reporting by Lauren Tara LaCapra; Editing by Leslie Gevirtz)