It would seem to make sense that as the financial industry contracts and the federal government keeps a closer eye on compensation at firms that it helps bail out that the age of massive bonuses is over.
According to The New York Times, "For most of the financiers who remain, with the exception of a few superstars, the days of easy money and supersized bonuses are behind them. The credit boom that drove Wall Street's explosive growth has dried up."
It is way to early to say that the era of the big comp package is gone.
The competition for Wall Street talent will remain keen. With the rise of investment banking compensation, most money center banks like JPMorgan (NYSE: JPM) began to pay their top traders and M&A staff increasingly larger sums. They had no other way to retain the talent that would allow them to remain competitive.
The dynamics of personnel supply and demand have not changed. They have just shifted to another part of the industry -- the hundreds of hedge funds and private equity firms that have made thousands of executives, traders, and bankers rich beyond the imaginations of most people.
Compensation at big investment banks will stay high. It may dip during the current crisis. It would be bad PR to pay huge bonuses this year and next, but ultimately the banking industry cannot afford to see all of its best people walk out the door.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
9-28-2008 @ 10:37AM
Kent said...
Although I have no objection to executive compensation on Wall Street, the leaner days ahead could be a blessing in disguise by diverting university students away from MBA's toward hard sciences, where they are needed. A typical research scientist can earn in excess of $100K after graduation due to a shortage. My friend's son just graduated with an advance degree and got a job with a leading high-tech company and earning $110K entry level pay.
9-28-2008 @ 4:37PM
mary love said...
i think all those c.e.o's should be held accounable for all this failure and take their big bonus and severence pays put back in to the bailout . barneyfrank chris dodd and all them that let this get in this shape treat them like you would us poor tax payers.
9-28-2008 @ 9:14PM
Eddie said...
This bail out is only for the tope exec's of these firms so they can get there big pay days as they always do, unless the system is fixed there will be more bail outs needed. The Goverment should have had these baks and investment firms research ways to fix the system .
9-28-2008 @ 9:44PM
clikdawg said...
Guess again, suckers -- the bill provides $100 billion "at the discretion of the president". Rest assured, not a one of the supposedly affected CEOs will lose 1 red cent.
Pelosi says "the party's over". I assume she means the Democratic Party, which has now been officially absorbed into The Wall Street Party; and that's who'll be running the country from now on.
9-29-2008 @ 12:59AM
clikdawg said...
For those of you a little slow on the uptake, that means that all of Pelosi & Co.'s bluster about CEO earnings was just a cover for transferring the cost of their golden parachutes from their company to you and me.
Insult to injury.
And hand me no crap about "unintended consequences" -- she knew what she was doing, alright. Take a look at the smiles on her and Reid's faces in the wire service photos: Now THERE'S a coupla quislings who look like they just hit the lottery ... as they no doubt just did.
Lotta room for under-the-counter rewards in that $700 billion ...