Wall Street's year-end bonus payments are expected to take a hit this year due to the coronavirus pandemic's ongoing impact on the economy, according to a third quarter compensation analysis by New York consulting firm Johnson Associates on Thursday.
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The report estimates that compensation incentives, which include cash bonuses and equity awards, will generally decline across the financial sector, marking the second consecutive year of mostly smaller awards.
According to the analysis, retail and commercial bankers will be the hardest hit, with their year-end incentive payments expected to decline by at least 25% - 30%, compared with last year’s payouts. Investment banking advisors can expect to see their payments decline by as much as 15% - 20%, while payments to asset management, hedge funds, and private equity staff will be smaller by 5% - 10% generally, compared with last year.
Meanwhile, significantly larger incentive payments are projected for fixed income sales professionals and traders (40% - 45%), investment banking underwriters (35% - 40%) and equities sales and trading professionals (20% - 25%).
Looking ahead, Johsnon expects some stabilization in 2021 with early projections for "modest salary increases, and flat to slightly increased incentives.”
“Unfortunately, as we look to 2021, even with an optimistic vaccine path, the pandemic will continue to negatively influence businesses, but perhaps to a lesser degree than in 2020," the firm said. "Headcount reductions will continue in the first half as companies transform and adapt."
The findings come as the United States has surpassed 10.3 million confirmed coronavirus cases and more than 241,000 related deaths, according to the latest update by Johns Hopkins University. The COVID Tracking project recorded more than 144,000 new cases on Wednesday, a 9.3 percent increase over the past week, with more than 65,000 people currently hospitalized.