Wall Street bonuses to fall as much as 45 percent

Wall Street bonuses to fall sharply in 2011
Wikimedia Commons user JSquish
Wikimedia Commons user JSquish

It's doubtful anyone will feel sorry for the so-called 1 percent but Wall Street professionals can expect to see a sharp drop in their annual bonuses this year, a new study reveals.

Year-end bonuses, including cash and stock awards, will decline by an average of 20 percent to 30 percent in 2011, according to Johnson Associates, a New York-based compensation consulting firm.

Some Wall Street professionals can expect to see their annual bonuses drop by as much as 45 percent compared with last year, depending on their area of expertise. Wall Street bonuses haven't declined year-over-year since 2008, amid the Lehman Brothers bankruptcy, financial crisis and global economic slowdown.

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"The lack of economic recovery, combined with ongoing uncertainty in the world markets, and global and regional regulation are driving most financial services firms to significantly reduce the size of their bonus pools," Alan Johnson, managing director of Johnson Associates, said in a statement.

As a result, most, but not all, professionals will receive smaller payouts this year.

Johnson Associates

Fixed income traders will be the hardest hit, with their year-end incentives expected to decline by as much as 45 percent, according to Johnson Associates.

Stock traders and senior management will see their year-end bonuses trimmed by up to 30 percent, while investment bankers can expect a 20 percent cut in their annual bonuses.

Wall Street's rank-and-file -- the less glamorous staff workers -- can expect to see their bonuses shrink by anywhere from 15 percent to 25 percent.

Bonuses for most other areas of the financial services industry -- including asset management, high net worth advisers, retail banking and prime brokerage -- will be flat or only slightly higher or lower than last year.

Business should improve in 2012, according to Johnson Associates, meaning Wall Street professionals can expect bigger bonuses this time next year.

"Barring further economic weakness or major collapses among banks or foreign countries, bonuses for investment and commercial bankers and those in asset and wealth management and alternatives could jump by 15 percent or more next year," Johnson said.

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    Dan Burrows, a veteran of Aol's DailyFinance, SmartMoney and MarketWatch from Dow Jones, covers the markets and economy with an eye toward investing for the long haul.