Wall Street’s bonus pool rose 15 percent to $26.7 billion in 2013, fueled by compensation deferred from prior years, according to estimates by New York state Comptroller Thomas DiNapoli.
Employees took home an average bonus of $164,530 last year, the most since the 2008 financial crisis and the third highest on record, DiNapoli said in a statement today. The bonuses rose even as profits from broker-dealer operations of New York Stock Exchange member firms fell 30 percent to $16.7 billion in 2013.
Shares of Goldman Sachs Group Inc., Bank of America Corp. and Morgan Stanley each rose more than 95 percent over the past two years, making equity awards worth more than when they were granted in previous years. During the same period, the bonus pool has grown by 44 percent, driven by deferred compensation, DiNapoli said.
“The industry still had a good year in 2013 despite costly legal settlements and higher interest rates,” said DiNapoli, a 60-year-old Democrat. “Wall Street continues to demonstrate resilience as it evolves in a changing regulatory environment.”
While profit at JPMorgan Chase & Co., the largest U.S. bank, declined as it announced more than $23 billion in legal and regulatory settlements, the bank said it wouldn’t hold those costs against employees when deciding pay because the behavior under scrutiny often happened in previous years.
Trading and investment-banking revenue at the nine biggest global firms fell 4 percent to $160 billion in 2013, as a drop in fixed-income revenue outweighed gains in equity trading and fees from advising and underwriting.
The largest Wall Street investment banks each set aside a smaller portion of revenue for employee pay to cut costs and improve returns. Shares of the three firms each jumped last year as an improving U.S. economy sent the Standard & Poor’s 500 Index to a record high.
Morgan Stanley reduced the portion of pay that it deferred to later years for top earners. The bank, which set aside 100 percent of 2012 bonuses for employees who had both total pay of at least $350,000 and incentive pay of $50,000, this year deferred 50 percent to 98 percent of those workers’ bonuses.
Asset and wealth managers saw the biggest increases in bonuses at major financial firms, with a 10 percent to 15 percent jump on average, compensation consultant Johnson Associates Inc. said in a report this month. Equity traders’ incentives rose 5 percent to 20 percent, while fixed-income employees saw a drop of 5 percent to 15 percent, according to Johnson Associates.