Wall Street Bonuses Rise Despite Down Year

While Some Top CEOs Declined End-Of-Year Compensation, Overall, Bonus Money Up 14 Percent

(AP)  This might have been one of Wall Street's most dismal years in a decade, but that hasn't stopped bonus checks from rising an average of 14 percent.

Four of the biggest U.S. investment banks - Goldman Sachs Group Inc., Morgan Stanley, Lehman Brothers Holdings Inc. and Bear Stearns Cos. - will pay out about $49.6 billion in compensation this year. Of that, bonuses are traditionally estimated to represent 60 percent, or almost $30 billion.

But that might not sit well with investors who held on to investment bank stocks this year - and watched them plunge by up to 45 percent. Investment houses have been slammed by the credit crisis, and top executives this past week said they've yet to see a bottom.

Further, some of those executives have even agreed to forgo their bonuses this year to reflect the poor performance. Morgan Stanley CEO John Mack and Bear Stearns CEO Jimmy Cayne won't be collecting their payouts.

Mack received no cash bonus a year ago but received stock and options worth an estimated $40.2 million, well above his $800,000 base pay. Cayne received a bonus of $33.6 million in 2006 and base pay of $250,000.

Goldman Sachs CEO Lloyd Blankfein reportedly is in line for a bonus of up to $70 million this year, as the nation's largest investment bank has largely navigated past any mortgage-related losses. Lehman Brothers' CEO Richard Fuld was granted a $35 million stock bonus for 2007, up 4 percent from last year.

There had been some predictions the increase in bonuses would have been significantly higher. However, layoffs and top managers giving up their bonuses have curtailed that.

For the army of bankers and traders on Wall Street, it remains to be seen what their bonus checks will offer when they're handed out over the next several weeks. Top performers will still see some significant compensation as an incentive not to defect, while underperformers will suffer, executives at the banks said.

"If you were to normalize our business ... you would see we had a record year across the whole enterprise," said Morgan Stanley Chief Financial Officer Colm Kelleher.

Morgan Stanley, the second-largest U.S. investment bank, reported compensation rose 18 percent to $16.6 billion from $14 billion a year earlier. This comes after the investment bank reported Wednesday the first quarterly loss in its history amid a $9.4 billion writedown due to the credit crisis.

Bear Stearns, the fifth-biggest securities firm, posted the first loss in its 84-year history on Thursday after a $1.9 billion writedown. It reduced compensation this year by 21 percent to $3.4 billion from $4.3 billion in 2006 - and members of its executive management committee, like Cayne, won't be collecting year-end bonuses.

"Compensation levels need to be maintained to reflect market levels," said Chief Financial officer Sam Molinaro.

At Lehman, compensation rose 9.5 percent to $9.5 billion, with bonuses accounting for an estimated $5.7 billion. The firm booked losses last week but managed to offset most of its mortgage writedowns and beat Wall Street expectations. Head count at the investment bank rose by 10 percent this year.

The bankers in the best position this year are at Goldman Sachs.

The nation's largest investment bank said Tuesday it was able to chalk up another record-breaking year with higher investment banking fees and smart bets on mortgage-backed bonds. It beat fourth-quarter projections.

In response, compensation at Goldman rose 20 percent to $20.1 billion. That means roughly $12 billion has been set aside for bonuses.

Still nervously waiting to find out about bonuses are the employees of Merrill Lynch & Co. The nation's largest brokerage won't report fourth-quarter results until January, and there has been some speculation newly appointed CEO John Thain might shake up the bonus structure.

Thain won't get a year-end bonus since he took the job on Dec. 1, after Merrill Lynch ousted Stanley O'Neal because of significant subprime losses. But he did take home a $15 million cash bonus just for taking the job.

[flagship-usa]

Know wonder there is no money left over to pay for better benefits, it all goes into their pockets.

[mediapreachr]

Wall Street is some kind of Bastille in the minds of a lot of regular americans.The people in charge(not necessarily this adm),got rid of a lot of rules put in since the fifties-it''s called "deregulation"-this way a few "knowledgeable",or the "in crowd" are making millions and the rest are just making peanuts.
Th talk thrown around that if you work hard etc. is just bs.

[neobrian-2009]

Most Rich People Either Inherited it or are Corrupt
There are very few who don`t fit in to this description,,..

[drivelphobe]

omega39...

The pay of soldiers, firemen and policemen are salaried. It must be adequate or no one would do the work. How do you suggest implementing bonus plans for these occupations? How would performance be improved using bonuses? It seems to me the best way to compensate these occupations is using a higher salary and adding benefits like life insurance, heftier pensions and lifetime medical coverage. Bonuses are usually effective to motivate more profit to the organization paying the bonuses. Doesn''t seem appropriate with the occupations you mention.

They do receive overtime pay. They could also change occupations if they feel they are inadequately paid. Most cops and firemen that I know feel they are making plenty and almost brag about it. Keep in mind that the profile on individuals performing these jobs is quite different than one used on high performing Wall Street positions. In other words, most soldiers, firemen and cops do not have the intellect to perform on Wall Street. Water seeks its own level.

Ask John Kerry about this.

[omega39-2009]

Wall Street jobs are demanding beyond belief. Most of these individuals put in over 80 hours per week, of rigorous, anxiety-ridden work. They are constantly researching, studying, and thinking. These are not the jobs where you roll in to work, have coffee, answer a few phones, take a nice lunch, play on the computer emailing your friends, and taking days off, pretending to be sick so you can play a game of golf. It''''s an industry where only the brightest and the best survive, and they earn every *** penny.

I could say the same about our soldiers, police and fireman. How much of a bonus should they get for their long hours and the fact that their like can be taken away at any moment?

[drivelphobe]

walt1944...

The rich will always get richer because they are smarter, harder working and they have income beyond their needs for consumption. Anyone can move into the rich category if they exercise discipline, focused hard work, and make investments rather than impulsive, ego-driven purchases.

This is a country of opportunity for everyone. Most poor, and middle class, will remain in their respective financial situation because of their habits, lack of initiative, lack of education or apathy. Most people get what they deserve and live their lives accordingly.

If you want more out of life, you have to make a move and do something other than express disgust with those who work, invest and take the risks. Most wealthy people have paid a heavy price for their success. They deserve everything that goes with that except disdain from losers. They pay a majority of the taxes and create millions of jobs. They are what makes this country run. Get a grip.

[walt1944-2009]

The economic strategy of the Great Emperor Bush II:
The rich get richer, the poor get poorer, the middle class becomes part of the poor, and the Fascist neocon Republicans could care less!

SIG HEIL, BUSH!!!

[neobrian-2009]

Their KING CloWn is About to lose his CroWn
Bushynomics-Rape the people,rid them of their money,..Tell them Lies,.." Corruption has Never been So Deeply rooted as it is now,..The Evil Roots of Resident Shrub have entwined Our Very existence as a free nation.With W`s help,corporate USA,is " The Epitome of True Evil ",...Greed,Corruption,Lies are the platform of the GOP sect.
Remember " Friends NEVER let friends vote republiCON"
This pit that Shrub has dug for us is Very deep,...Do Your part,..Do Everything Possible to rid the USA of this dreaded " Culture Club of Toe-Tapping Greedy Liars ",...It`s Our Future,..

[hunterct]

The only way to control these runaway salaries and perks is to tax at 90 percent salaries above a certain level the way they did in the fifties.

[drivelphobe]

Wall Street jobs are demanding beyond belief. Most of these individuals put in over 80 hours per week, of rigorous, anxiety-ridden work. They are constantly researching, studying, and thinking. These are not the jobs where you roll in to work, have coffee, answer a few phones, take a nice lunch, play on the computer emailing your friends, and taking days off, pretending to be sick so you can play a game of golf. It''s an industry where only the brightest and the best survive, and they earn every *** penny. If you think they are over paid, go try it for yourself Mr. Smarty pants. The job is available to anyone who can cut it. That exclude little baby whiners like some of the posters.

Hey olbd, if you want a bonus? Change jobs or work harder. And Terrapin, no one needs your money in the market. You''re the loser on that.

[eskieville1]

These people are nothing but crooks in suits. Where is Robespierre when we need him? Do I smell revolution in the air?

[sharncedar]

Hey the good news is these numbers are getting so large we could balance our federal budget just by taking these ill-gotten "bonus checks" from the stiff, lifeless hands of about 2,000 pieces of trash. A cheerful thought.

Should 300 million suffer, or should 2,000 suffer? An easy choice. It''s going to be a ho, ho, ho Christmas when America wakes up. But Wall Street criminals ain''t gonna be laughing, hard to laugh without a tongue.

[producer4u]

I say give them a free ribeye coupon (if) they did a good job and give the rest of the $30 billion to the poor and sick. Where''s the Christmas spirit?

[mcv57]

The art of Corporate thief, the corruption is out of control. We all have the Bushwacker, George Bush, as author and conductor for this buchery corporate thief economics.

[enriquecaliente]

Big Business, Big Government one and the same. We''re all just fodder to those who''s families are in charge of the economy. The Bushes, Kennedy''s, Morgans, Mellon''s and the rest. We exist only for them to live like Kings and Queens. I''d be surprised if those of us here on this board venting are not on a list of people to be silenced as soon as all rights have been abolished. Thats just around the corner, wait and see.

[missingamerica]

And the lesson is: Teach your children to find a position as a parasitical middleman.

[hypnotoad72]

Why? Execs say they deserve higher pay because of the risks they have to take. In a down year, why should they be paid for failure? Nobody else gets paid for failure; though some get golden parachutes after mucking up their job and having to leave. Ironic; getting a golden parachute after giving a golden shower...

[olebd]

Bonus? What''s a bonus? I haven''t seen a bonus in at least 10 years. I thought they went out with company cars and employer supplied pensions.

[terrapin78]

This is why I no longer put money into the market. Metals!!!!!

[omega39-2009]

excellent job, you have been instrumental in wrecking the American economy. Take a ceeegar out of petty cash.