Bull Bear Report Dec 28 2009

Ten Things You Might Not Know About Bonus Season

By yoree koh

News travels fast on Wall Street, especially when it comes to pay and bonuses. But here are 10 things that you may not know about bonus season for this year and years past:

1. Between 2000 and 2008, Wall Street paid $187.8 billion in bonuses to its employees. Nearly $130 billion of that amount was paid out between 2004 and 2008.

2. During the past 25 years, there have been four periods of bonus declines. Each period was followed by a steep increase that made up for the losses within two years:

-- 1988 and 1989 (down by 21.3% and 5.5%, respectively) were followed by 1991 (increased by 95.7%).

-- 1994 (down by 15.7%) was followed by 1995 and 1996 (rebounded by 26.8% in 1995 and 59.3% in 1996).

-- 1998 (down by 18.8%) was followed by 1999 (increased by 48.5%).

-- 2001 and 2002 (down by 33.2% and 25.0%, respectively) was followed by 2003 (increased by 61.3%).

3. The average bonus payment in 1985 was $13,970 -- or $27,596 after adjusting for inflation. The average bonus payment in 2007 was $177,010, or an inflation-adjusted $183,736.

4. The largest amount of bonuses awarded in one year was in 2006 when the total came to $34 billion. That year, the average bonus was $190,600 ($203,382 after adjusting for inflation) -- nearly two-and-a-half times the average annual salary for all nonfinancial jobs in New York City.

5. From 1983 to 1988, Wall Street bonuses accounted for about 21% of total wages paid in the securities industry compared to 33% from 1992 to 1997.

6. As of 2007, Wall Street bonuses accounted for roughly half of total compensation in the finance industry.

7. As of 2007, Wall Street bonuses made up more than 60% of all bonuses paid to professionals in any industry in New York City.

8. In 2008, Jiang Jianqing, chairman of Industrial and Commercial Bank of China, the world's largest bank by market value, made $234,700 -- $96,372 of which came from his bonus. Jamie Dimon, chief executive of JPMorgan Chase -- the world's fourth-largest bank -- made $19.6 million. Dimon did not take home a cash bonus in 2008.

9. In 2008, of the original nine TARP recipients (BofA, Merrill Lynch, Bank of NY Mellon, Citigroup, Goldman Sachs, JPMorgan, Morgan Stanley, State Street, Wells Fargo):

-- Over 800 employees at the nine firms were awarded bonus payments of $3 million or more each.

-- More than 200 employees at both JPMorgan and Goldman Sachs took home more than $3 million.

-- 4,793 employees at the nine firms took home $1 million or more. Of those employees, 1,626 worked at JPMorgan.

10. Lloyd Blankfein was awarded $68.5 million in cash and stock in 2007, a record payout for the head of a publicly traded securities firm. About $26 million of that was a cash bonus. This year, Blankfein and 29 other top Goldman executives will receive their entire year-end bonus in stock. Based on Goldman's closing stock price today ($162.74/share), Blankfein's historic cash bounty in 2007 would translate into 165,819 shares had it been awarded in stock.

Sources: Office of the New York State Deputy Comptroller, Reuters, The China Post, Office of the New York State Attorney General, and Goldman Sachs Proxy Statement of April 6, 2009.


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