On Wall Street, When Bonuses Are Down, Salaries Go Up

by Derek Loosvelt | February 24, 2011

Before I point you to the stats that New York Comptroller Thomas DiNapoli recently cited about the slight drop in cash bonuses on Wall Street last year versus 2009, let me ask you this question: If I said I was going to give you $1 million over the course of the next 12 months, would you rather take $700,000 now and $300,000 at the end of the year, or $300,000 now and $700,000 at the end of the year?

While you mull over your answer, here are the aforementioned stats: According to DiNapoli, "Financial companies disbursed $20.8 billion in [cash bonuses in] 2010, compared with $22.5 billion a year earlier."

However, "almost everyone's salaries have increased over the past couple years," according to Michael Karp, chief executive officer of Options Group, an executive search and compensation consultant firm in New York, "so you're seeing more cash all year, but at the end of the year you aren't getting the big, fat cash check you used to."

I hope you chose to take the $700,000 upfront.

As for DiNapoli, he just hopes Wall Street keeps paying its employees as much as possible.

Why is that? you ask.

Two words: tax revenue.

"Before the financial crisis, Wall Street-related earnings accounted for as much as 20 percent of the state' tax revenue. That amount has slid to about 13 percent, and to about 7 percent of New York City tax revenue, from 13 percent, DiNapoli said."

(Bloomberg)

Filed Under: Finance


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