Wall Street bonuses swell for a second year ahead of AI, technology cuts
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Wall Street bonuses are expected to grow for the second consecutive year, per a projection from compensation consulting firm Johnson Associates out Wednesday morning.
Why it matters: Record trading revenue from most of the major banks, year two of a bull market and interest rate cuts that could spur more dealmaking are all equaling out to higher year-end bonuses.
What they're saying: "Virtually every sector in the industry is projected to reward professionals with larger bonuses for the second straight year," said Alan Johnson, managing director of Johnson Associates.
By the numbers: Given the strength of the stock market, it may not be surprising that equity sales and trading professionals are expected to see the highest percentage gains on their cash bonuses and equity awards, up 15 to 25% from 2024.
- Equity bonuses are expected to rise more than bonuses for those in fixed income.
- Real estate professionals are the only group within financial services seeing no change to bonuses.
Between the lines: Incentive changes indexed to 2021 levels are flat or overall but still lag inflation.
Yes, but: Despite the incentive increases, hiring is "generally muted across the industry," according to the report.
- AI and technology-led headcount reductions could fuel 10 to 20% lower headcount across the industry in the next three to five years.
The bottom line: With stocks up and dealmaking on the rise, Wall Street workers may be set for further gains to their bonuses ahead.
- So long as AI doesn't beat them to it.
