The average cash bonus on Wall Street last year was $128,530 — a 9 percent drop from 2009. But there’s no need to break out the world’s smallest violin. Bonuses might be shrinking, but a report issued by State Comptroller Tom DiNapoli shows that overall compensation was up 6 percent in 2010 with Wall Street wages climbing 21.9 percent in the first half of 2010 compared to the same period the previous year. DiNapoli says that rather than a sign of weakness, reduced bonuses indicate that “Wall Street is changing its compensation practices in response to regulatory reforms adopted in the aftermath of the greatest financial meltdown since the Great Depression. Past practices rewarded short-term gains at the expense of long-term profitability.” In other words, pre-financial meltdown the thinking went, if risky investments get you a fat bonus at the end of the year, who cares if the SEC indites you the next?
Lloyd Blankfein has argued the opposite — at least behind closed doors — stating that guaranteed compensation is a bad practice since it isn’t tied to a firm’s performance. But DiNapoli’s report indicates that in the wake of government bailouts, there’s been a definite shift toward deferred compensation, stock options, and higher base salaries. It probably helps that “deferred compensation outrage” just doesn’t have the same populist ring.
Average 2010 Wall Street cash bonuses fell to $128,530: report [NYP]
