Ka-ching! Huge Wall St. paydays returneven as economy remains mired

Oct 09 2010

Ka-ching! Huge Wall St. paydays returneven as economy remains mired

What recession?

Total Wall Street pay and bonuses are on track to break a record high for the second year in a row, according to a new report in The Wall Street Journal.

Despite a taxpayer bank bailout and the current global financial crisis that crippled America, approximately three dozen of the top publicly held securities and investment services firms surveyed will dish out a whopping $144 billion in 2010, beating out the $139 billion paid in 2009. As a result, fat cats will get fatter as compensation is expected to rise at 26 of the 35 firms surveyed.

“Until focus of these institutions changes from revenue generation to long-term shareholder value, we will see these outrageous pay packages and compensation levels,” said Charles Elson, director of the Weinberg Center for Corporate Governance.

Wall Street’s image has undergone a public flogging after financial firms paid out hefty bonuses in recent years despite one of the worst periods in financial market history. President Obama called the $18.4 billion in Wall Street bonuses last year “shameful,” and labeled them “the height of responsibility.”

But many heads of the firms have said they fear they’ll lose their best employees if they don’t adequately bankroll them. Firms involved in the report said it was too soon to comment specifically on the 2010 payouts.

According to the pay numbers, firms — which are reaping the benefits of low interest rates and strong global markets — continue to base their pay on economic and market conditions instead of pressure from regulators abroad and in D.C.

Revenue is expected to increase at 29 of the 25 firms surveyed, the WSJ report said, but pay is still outpacing revenue.

Overall, Wall Street is expected to pay 32.1% of its revenue to employees. That number is the same as last year and below the 36% in 2007.

The estimated $61.3 billion profit for the firms surveyed in 2010 falls about 20% short from the record $82 billion in 2006. But the compensation across the firms surveyed still increased 23%.

Wealth Finance