As you may have heard, bonus season this year is going to be a bit tricky, on account of the fact that Wall Street banks didn’t make much in the way of cash in 2011. While paying some seniors staff zero dollars is being considered, it still may not be enough to pick up the slack. There is one idea that’s been floated among firms but shot down, so far, for fear of being too risky, so risky that it’s probably not even safe to mention it here but I’m gonna– freezing pay for junior staff. (Oh god, shhh, don’t say it aloud, we don’t want to start a run on the banks!) Everyone wants to do it but no one’s got the cojones, fearing the backlash that would come from angering “future stars” whose names will be learned in 5-7 years when they graduate from second class citizen status. No, the consequences would be dire. Unless…unless everyone put up a united front against these incredibly powerful and intimidating people?

Wall Street’s biggest firms, facing a slump in investment-banking revenue, are considering freezing compensation levels for some junior bankers, according to people familiar with the deliberations. Credit Suisse is likely to suspend its practice, an industry norm, of boosting pay automatically each year for analysts, associates and vice presidents within the investment- banking division, a person with direct knowledge of the decision said. While those employees will get their regular annual salary increases, bonuses probably will be lowered to keep total pay flat from a year earlier, said the person, who requested anonymity because the plan isn’t public. Goldman Sachs and JP Morgan are being watched by competitors for signs the companies are planning similar moves, said people at four other firms. Cutting pay can be perilous if your rivals don’t because it’s easier for junior bankers to defect, draining a future generation of talent. Wall Street firms may make the change en masse only if one or more of their biggest rivals act first, the people said. “There’s always the risk that people may go across the street for a better deal,” said Joseph Sorrentino, a managing director in New Yorkat Steven Hall & Partners, an executive- compensation consultancy. Among junior bankers “you have some potential future stars and you want to make sure you keep them engaged and keep them happy and performing.” JPMorgan, which doesn’t plan to alter its practices, may change course if other firms do so, a person briefed on its decisions said.

If anyone wants to talk about this further, meet in the alley behind 200 West around 9 o’clock and tell no one. You don’t want to know what happened to the last c-level executives to cross a first-year analyst, let alone a whole army of them.

Wall Street Mulls Partial Pay Freeze [Bloomberg]

77 comments (hidden to protect delicate sensibilities)
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Comments (77)

  1. Posted by N. Muntz | January 10, 2012 at 1:10 PM

    HA HA!

  2. Posted by 22 YO Rainmaker | January 10, 2012 at 1:13 PM

    Im so outta here

  3. Posted by jumbo | January 10, 2012 at 1:15 PM

    Law firms have basically done this with bonus levels the last few years (i.e., Cravath scale bonuses as documented on Above the Law) – just let the biggest or most prestigious bank set a relatively low ceiling on comp and then everyone else will fall in line.

    And "stars"? Really? First, where are they going to go if no one is hiring and the kids (and new MBAs) haven't established names for themselves? Second, the value over replacement level junior banker would be relatively low for any employee at that level – replacing an unhappy 22 year old should be the easiest problem banks have to address.

  4. Posted by Lynnn T. | January 10, 2012 at 1:21 PM

    Make some mist in my maidenforms and I'll maintain your money metrics!

  5. Posted by SilverSpoon | January 10, 2012 at 1:25 PM

    It doesn't matter to me, my dad still pretty much owns the company.

    -Choate / Phillips Andover / Hill / St. Pauls Class of 2012

  6. Posted by guest | January 10, 2012 at 1:29 PM

    That kind of sounds like collusion.

  7. Posted by future generation | January 10, 2012 at 1:40 PM

    When I tell my friends at the bus. school recruiting office, you'll be sorry.

    Come at me bro.

  8. Posted by WorkLifeBalance | January 10, 2012 at 1:41 PM

    What's that number for the Buy Side again?

    -Fuck You Too

  9. Posted by Guest | January 10, 2012 at 1:44 PM

    Send the 1st year 10-year old analysts, and I'll give them a raise.

    – P State Capital

  10. Posted by derp | January 10, 2012 at 1:51 PM


  11. Posted by The Truth | January 10, 2012 at 2:28 PM

    What about high flying 3rd year analysts?

  12. Posted by CarriedInterest | January 10, 2012 at 2:43 PM

    But… am I supposed to buy bottles at Avenue to lure bridge & tunnel girls???!

    -Junior Future Rainmaker

  13. Posted by Guest | January 10, 2012 at 3:01 PM

    Gee, I hope someone calls their insurance.
    -AIG FP P&C Quant

  14. Posted by Guest | January 10, 2012 at 3:11 PM

    Dude, that is gross. It takes a couple of years for them to mature.
    -J. Epstein

  15. Posted by Guest | January 10, 2012 at 3:15 PM

    I'm assuming you left out Exeter because you're talking about UBS

  16. Posted by 3rd Year Analyst | January 10, 2012 at 3:27 PM

    "Are you saying I have to move BACK to Murray Hill?"

    -3rd year analyst

  17. Posted by Simpsons | January 10, 2012 at 3:31 PM

    You can't treat the working man this way! One of these days we'll form a union, and get the fair and equitable treatment we deserve! Then we'll go too far, and become corrupt and shiftless, and the Japanese will eat us alive!

  18. Posted by pazzo83 | January 10, 2012 at 3:40 PM

    Might have to downgrade to Joshua Tree.

  19. Posted by Guest | January 10, 2012 at 3:47 PM

    Keep posting on dealbreaker all day and you'll be moving BACK to Ohio.

    -Your MD

  20. Posted by Dr_Zaius | January 10, 2012 at 4:08 PM

    I'm assuming he added Hill because he went there. Not really Andover, Exeter, St.Paul's caliber.

  21. Posted by Hakuna Matata Guy | January 10, 2012 at 4:10 PM

    Plenty of spots for them in international secret service

  22. Posted by guest | January 10, 2012 at 4:11 PM

    Painfully unfunny.

  23. Posted by guest | January 10, 2012 at 4:12 PM

    did you go from a 6 to midnight signing that "your MD" guy?

  24. Posted by Guy who loves tacos | January 10, 2012 at 4:13 PM

    Try taco bell in Penn Station instead

  25. Posted by Guest | January 10, 2012 at 4:27 PM

    That would be the Israeli Secret Service. Thanks for playing….

  26. Posted by Guest | January 10, 2012 at 4:32 PM

    Just don't sic your 1000+ Facebook friends on me.

  27. Posted by Guest | January 10, 2012 at 4:36 PM

    Naw, its just a union, but for management.

  28. Posted by Whoops | January 10, 2012 at 5:49 PM

    We're putting St. Paul's up there with Andover and Exeter now? Shame.

  29. Posted by E. Texas Gas Trader | January 10, 2012 at 5:53 PM

    Don't make me sic my 40,000 connections on LinkedIn upon you.

  30. Posted by Petroplus Forecaster | January 10, 2012 at 5:55 PM

    Why is a medical doctor commenting?

  31. Posted by NTTAWWT | January 10, 2012 at 7:06 PM

    If that's what you want to discuss with random strangers on the Internet, you may be on the wrong website…

  32. Posted by Guest | January 10, 2012 at 7:29 PM

    What? Everyone knows those three schools are like the Harvard/Yale/Tufts of prep schools…

    -St. Paul's '01/Tufts '05

  33. Posted by Guest | January 10, 2012 at 9:51 PM

    They let Jews into St. Paul's now?

  34. Posted by LOL | January 11, 2012 at 10:25 AM

    tufts. . . HAHA

  35. Posted by brochacho | January 11, 2012 at 11:23 AM

    "Star investment banking analysts", otherwise known as "future private equity and hedge fund analysts". You don't need to worry about retaining them, but maybe they'll throw you some fees down the road if you pay them now.

  36. Posted by Ray Finkle | January 11, 2012 at 11:24 AM

    As stated prior, in somewhat-exhaustive manner: St. Paul's/Choate are both second tier, Hill is third tier. Andover and Exeter are in a league of their own.

  37. Posted by Ray Finkle | January 11, 2012 at 11:26 AM

    In other news Charlotte bankers are still popping bottles at The Tilted Kilt.

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    Bonuses are not down for senior level executives (top 1%) at CS. the PR machine at CS leaks false info – (the top brass – top 5% or so will likely be up from last year, with no decrease in their $$$$ millions of dollar bonuses they reaped in last year). For example, how else would this banker (Reece) be able to buy a $9m home in this market.

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