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Wall Street compensation climbs 6%

Thursday 24 February 2011 - by Will Henley

Total pay for securities workers in New York City grew by six per cent last year - up to $20.8bn (€15.1bn) - according to the financial district's regulator.

While firms devoted nearly 47 per cent of net revenue to compensation, Wall Street's contribution to the City budget however declined from 13 per cent of total revenues to 7 per cent.

Wages paid during the first half were up 21.9 per cent on the previous year, as broker and dealer operations made profits of $27.6bn (€20bn) in 2010.

Yet, in the wake of regulatory reforms, the average cash bonus paid to Wall Street executives declined by 9 percent to $128,530 (€93,352).

Announcing the figures on Wednesday, the Office of the New York State Comptroller said that total compensation was down a third on that awarded in 2007 before the financial crisis took hold.


State comptroller Thomas DiNapoli said the drop in the cash bonus pool reflected industry-wide and regulatory changes, including a move toward deferred compensation and higher salaries.

"Cash bonuses are down, but that's not an indicator of a weakness on Wall Street," DiNapoli said.

The regulator said that the high compensation package for the first half reflected cash bonuses paid during the first quarter, higher base salaries and deferred compensation.

"Wall Street is changing its compensation practices in response to regulatory reforms adopted in the aftermath of the greatest financial meltdown since the Great Depression," DiNapoli insisted.

"Past practices rewarded short-term gains at the expense of long-term profitability."

DiNapoli said that the deferred compensation would mean that tax revenues fall in the immediate term, but would push up again when it is finally claimed.

He said: "A more stable and less volatile securities industry is in the best interests of Wall Street, the City and the State."

During the recession, the City's securities industry lost 30,700 jobs, a decline of 16 percent, or 3.5 times the rate of total job loss in New York City.

However it added 3,600 jobs between August 2010 and December 2010.

The figures released today relate only to bonuses paid by financial institutions in New York City and not to other US or foreign-based employees.


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