Wall Street bonuses expected to tumble

Consultant firm projects bonuses in financial sector to sink in 2008 on credit problems, decline in business, and mounting layoffs.

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)

A compensation consultancy firm projects Wall Street bonuses to tumble by as much as 45% in 2008.

NEW YORK (CNNMoney.com) -- Looks like Wall Street bankers can kiss those fat bonuses goodbye this year.

Some bankers' bonuses will be slashed by nearly half in 2008, and most can expect a 15% to 25% reduction from last year's levels, according to a recent projection from compensation consultancy firm Johnson Associates.

Johnson Associates expects the bigwigs to give up the most, with bonuses of senior firm managers at investment banks tumbling 35% to 45% from 2007 levels. With the public scrutinizing deep-pocketed CEOs when most Americans are penny pinching, shareholders may not stand for executives taking home millions while their companies lose billions, the consultancy firm said.

Other staffers at investment banks could see their extra compensation sink 20% to as much as 30%.

Hedge fund managers and commercial and retail bankers' bonuses could be 15% lower, while real estate brokers may have to take home 10% less than last year.

That's because banks have experienced "a fundamental change in business," weighing on their results, according to the consultancy firm. The subprime mortgage meltdown and ensuing credit crisis have hampered banks from engaging in their core lending businesses. As a result, layoffs, write downs and huge losses have mounted for the industry, and stocks have been hammered.

Merrill Lynch (MER, Fortune 500), Citigroup (C, Fortune 500), Wachovia (WB, Fortune 500) and many others have reported staggering losses and took billion of dollars worth of writedowns because of bad mortgage bets. When the final quarterly results are tallied, the financial sector is expected to report total profits of just $8.9 billion in the second quarter, down 85% from earnings of $61.3 billion a year ago.

Recently the meaty bonuses that bankers had become accustomed to began to shrink. Wall Street bonuses sank 4.7% in 2007 as firms' impressive results became impressive losses and 2008 looks like it might be much worse. To top of page

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
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More


Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.