October 10, 2011

The results of a survey likely to delight Occupy Wall Street protesters are in. According to eFinancial Careers, more Wall Street executives said they expect their bonuses to fall than to rise in the next few years.

The job site for executives working in asset management, investment banking or securities, revealed that 80 percent of 1,098 survey respondents said they don't expect bigger bonuses in the next three years, compared to 66% who felt that way in 2010.

This year could be a different story though. Despite the gloomy economy, many Wall Street employees are optimistic about their bonus prospects for 2011. Over 40 percent of respondents said their own bonuses would rise this year, while 30 percent said they would probably fall.

The majority of financial workers say that the primary reason their bonuses will rise this year is that they performed better than last year, while 22% believe their firm's strong performance will lead them to a bigger bonus.

Overall, hedge fund employees were more buoyant than their counterparts at commercial or bulge-bracket banks. Around half the respondents from hedge funds and boutique banks said they expect stronger bonuses this year, compared to 36 percent at commercial banks.

Interestingly, among those who believe their bonus will fall this year, only 2% attribute this to a drop in their personal performance. On the other hand, 45% said that if their bonus rises, it will be due to their personal performance.

(In other words, if you get a bigger bonus this year it's thanks to you, and not your firm. But if your bonus drops, it's your firm's fault, not yours.)

Overall, most bankers agree that Dodd-Frank's weighting of compensation towards base salary rather than bonuses, stock and options packages, have contributed to recent downsizing at Wall Street firms.

"Dodd-Frank is pushing firms to shift how they construct compensation," says Constance Melrose, managing director, eFinancial Careers, North America.

"One of the consequences is that there is less flexibility in their approach to compensation. Base salaries are a larger factor," she points out.

As a result, firms whose performance is suffering have less flexibility to defer or lower bonuses, and are tied more strongly to employees fixed salaries, Melrose explains. Lay offs are therefore more likely than before in a bad economy.

ABOUT THE AUTHOR
Melanie Rodier has worked as a print and broadcast journalist for over 10 years, covering business and finance, general news, and film trade news. Prior to joining Wall Street & Technology in ...