Banker's bonuses: 40% bigger this year

Global financial firms are planning to increase bonus payments as strong financial markets propel banks back to profitability.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Ben Rooney, CNNMoney.com staff reporter

When Wall Street nearly collapsed
Would panic prevail? That was the question gripping the world in the days surrounding the fall of Lehman Brothers on Sept. 15, 2008. One year after that terrifying Monday, the people who struggled to cope with the financial crisis share what they were thinking as chaos broke out.
Who should be the business leader of the decade?
  • Steve Jobs
  • Warren Buffett
  • Google’s Larry Page and Sergey Brin
  • Bill Gates
Photos
10 biggest CEO paychecks
Including salary, bonuses, stock and options, these public company CEOs took home pay packages last year worth up to $104 million.

NEW YORK (CNNMoney.com) -- Bonuses at financial firms worldwide will increase by an average of 40% this year, according to an annual report released Monday.

Options Group, a New York-based executive search and compensation consultancy, said near-record revenues from fixed-income, commodities and foreign exchange trading will help push bankers' bonuses back up after a slump in 2008.

The report, which was based on data from 300,000 industry professionals worldwide, also showed that bonuses are increasingly being offered in the form of multi-year stock options.

Even with this year's projected rebound, however, bonuses are expected to remain below the record levels of 2007.

Among the financial firms that are expected to increase bonus pay this year are big U.S. banks such as Goldman Sachs (GS, Fortune 500), Morgan Stanley (MS, Fortune 500) and Citigroup (C, Fortune 500).

Last week, Goldman Sachs and Morgan Stanley said they stand to spend $35 billion combined this year on employee compensation.

Wall Street's compensation practices have been heavily criticized by lawmakers and the public for encouraging the risky behavior that helped cause last year's financial meltdown.

Indeed, many of the banks that are now planning to raise bonus payments this year received taxpayer-funded bailouts in 2008.

To help prevent a repeat of last year's crisis, the Federal Reserve is preparing to force big U.S. banks to abide by longstanding rules banning excessive or inappropriate banker pay.

The Fed said last month that a review of bank pay practices will "focus on whether compensation arrangements provide employees incentives to take excessive risks that could threaten the safety and soundness of the banking organization."

The rebound in bonus pay comes as banks around the world have returned to profitability after last year's crisis forced the collapse of many long-standing investment firms.

The Options Group study revealed that bonuses will be largest for employees who were able to take advantage of rallies in key markets during 2009.

"The areas where professionals will receive largest bonuses are commodities, high-yield and investment grade credit, and equity derivatives," said Michael Karp, co-founder of Options Group.

However, the uptick in bonus pay is partly a reflection of much lower headcounts at many global banking and investment firms.

After last year's "unprecedented consolidation" in the banking industry, "bonus pools will actually go further this year," according to the report.  To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
50 years of the Ford Mustang Take a drive down memory lane with our favorite photos of the car through the years. More
Cool cars from the New York Auto Show These are some of the most interesting new models and concept vehicles from the Big Apple's car show. More
8 CEOs who took a pay cut in 2013 Median CEO pay inched up 9% in 2013 to $13.9 million. But not everyone got a bump last year. Here are eight CEOs who missed out. More
Sponsors
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.