The Wall Street bonus pool will be even shallower this year, according to the most obvious report ever.

As merger activity slows and banks write down billions of dollars of assets, bonuses for investment bankers and stock and bond traders could decline by at least 10 percent in 2008, while top executive bonuses could fall by as much as 35 percent, according to the report dated May 2.

The credit crisis will mostly affect bonuses for workers directly involved in trading and selling assets like subprime mortgage bonds, the report said.

It's kind of awesome that someone got paid to write that report.

Wall Street bonuses could slide in 2008: report [Reuters]

Those watching CNBC’s “The Call” circa 11:30 this morning know that Charlie Gasparino lost a bet to Mary Thompson over how big Lloyd Blankfein’s package would be this year, with Melissa Francis officiating. The terms of the wager stated that the loser had to buy dinner at Campagnola. Interestingly enough, No Sleeves claims that he didn’t lose anything, but was simply doing the chivalrous thing that anybody boy worth his Rego Park salt would do, and treating the ladies (his words: “It’s the gentlemanly thing to do, and I am a gentleman”). Bull shit. The fact that said dinner, which came to $412.40, was paid for with a Visa card bearing the name “Gasparino” (expiration date: 09/08) is irrefutable proof that Charlie Gasparino is a terrible judge of size. Anyway. As NS noted, we enjoy chronicling his every move, from “what deli meats [he] eats to where [he] works out,” so obviously we sent Intern Scott to pose as the pepper grinder and take copious notes, as well as the Visa number with which we bought a bunch of shit for ourselves (mostly Italian delicacies filled with nitrates so the theft would go undetected). His report:

- Charlie: Mixed green salad, Dover sole with ketchup (women registered shock and disgust over choice of condiment, and I would agree), steamed broccoli on the side. (Consumption of the salad seemed forced, as though he would’ve preferred another dish but sensed he was being watched)

- Melissa: pasta with some sort of cream sauce (recommended by maître d’ “Frankie”)

- Mary: house salad

- Melissa/Mary: Split a T-bone for 2, home fry potatoes, creamed spinach, steamed broccoli

- Sooprezat on the table, Charlie didn't touch it (odd)

- White wine

- 1 Napoleon, split three ways

- Charlie gave shit to some Goldman guy

- Frankie mentioned that Charlie had been there the night before, and the night before that

- "A lot of pinky rings"

We also have some brief footage of the dinner, after the jump.

The worst fears of investment bankers regarding bonuses have not come to pass. Declining profits at many Wall Street banks, record breaking losses at some, and dire predictions from compensation experts gave rise to a fear that bonuses paid to bankers, traders and brokers would decline precipitously. That has not happened.

Wall Street bonuses grew in 2007 to a total of $39.34 billion, up from $36.19 billion in 2006. That is good news for many of our readers on Wall Street. But the news of that 8.7% increase will likely lend confidence to the cozy consensus that there is something seriously unsound with Wall Street's compensation model and that a new paradigm needs adopting, perhaps with the very visible hand of the state pushing banks and brokerages into the new mould.

The sentiment that there is something wrong with the system that results in paying some on Wall Street more in a year than many Americans—including many journalists—will be paid in a lifetime has a long track record. Last year's record bonus numbers, for instance, also summoned forth carping about allegedly "outsized" compensation. But in the best of times—when firms were registering record profits and shareholders reaped the benefits of huge dividends and rises in share prices—this view could be dismissed as the dividend of envy. In more troubled times, however, the calls for compensation reform can seduce even more balanced minds.

Before this goes any further, it's important to see these calls for what they are—which is yet another attempt to substitute a rational plan backed by government coercion for a market process. Planning is conceit that will never die regardless of how often we hear about the triumph of free markets and the end of eras of big government. Many among us remain as dependent planning as a drunk is on booze. They can go a long way without the intoxicant but certain triggers are sure to see them back at the bar.

[More after the jump]

Earlier this afternoon, CNBC’s Charlie Gasparino reported that some guy in Merrill Lynch’s fixed income research group had “inappropriately relieved” himself in protest of the downsizing of his bonus. Merrill has officially explained that this was simply an unfortunate accident, and then the bank turned red and scurried to the other side of the room.

We’ve been digging into this story because the way it’s told by the delicate souls at CNBC, it’s way to vague. What worse, the vagueness is giving rise to rumors that are totally untrue. It's fast becoming the Wall Street equivalent of an urban legends. Here’s what didn’t happen: a guy did not urinate on his desk because he was “pissed off.” The real story is so much worse.

In the first place, it wasn’t piss. It was shit. DealBreaker can confirm this much. After that the details get a bit fuzzy. The way we first heard it is that a guy took a dump in the rest room, stomped in it, and then dragged it all over the place by walking around with it on his shoes. Merrill’s story is that there was “an unfortunate accident” in one of the stalls—which we take to mean that some guy smeared his shit all over the bathroom because how the Hell could you miss the toilet—and that another person inadvertently stepped in it and tracked it all over.

So now you know.

We like to think our time working for this e-rag has given us, if not company-supplied dental insurance, a strong stomach, able to withstand the most hideous, funky tasting spunk of news. But this truly makes us want to gag: Goldman employees getting shit bonuses. Makes you want to gag, too, doesn’t it? According the Post cost center employees at the Broad, expecting to receive 75 percent of their salary as bonus this year, got fifteen. On a day when I woke up specifically wondering if I should get out of bed or not, and more generally asking, what the hell am I doing with my life, this is not the kind of news I want to hear. When you can’t count on the lowest of Goldman Sachs workers—IT, back office, etc.—to at least be compensated on par with the senior executives at, I don’t know, Bear Stearns, what can you count on? Nothing. If I were born with normal functioning tear ducts, I’d probably be shedding a few right about now (rest assured that there’s an almost embarrassing amount of wet ones rolling down Carney’s face).

Goldman Sack-Cloth Bonuses [NYP]

Yesterday the lads and lasses at Bear Stearns got their bonus numbers, which means that last night was ridiculous. It’s almost always this way around bonus time, with young bankers drinking themselves stupid either the celebrate a great year or mourn the final, appalling truth about their compensation numbers.

One young Bear-ette who last night found herself drunkenly eating a cheeseburger as she struggled to come to terms with the fact that her hourly wage probably worked out to just about what the guy serving the burger made.

“I haven’t eaten a cheeseburger in three years,” said the toned would-be femme version of a master of the universe. (Mistress of the universe has too many unintended implications.)

Look people. We know it’s tempting to self-medicate with food, but the answer is not in the extra calories. And the only thing worse than being poor is being fat and poor.

We've had word that Morgan Stanley and Bear Stearns had the bonus communications go out last night. Information on both is still sketchy and we'll update you as we get more details. (Send what you know to tips@dealbreaker.com or text it to our text tips hotline: 973-495-0177. We can be instant messaged at TheDealBreakers.)

We told that despite performance by Morgan Stanley's brokerage arm being up over 17 percent, the bonuses were much lower than last years. Bear numbers will also be lower but we're still compiling and collecting this information.

It seems that the forty-percent bonus wipe-out we reported this morning is fast becoming the industry standard, at least for certain fixed-income groups. Merrill Lynch, which reported a $2.24 billion third-quarter loss and was forced to seek help from outsider investors, has given out orders to fixed-income managers to cut 2007 bonuses by an average of 40 percent, according to a Bloomberg report that hit today.

Of course, the bonus wipeouts won’t hit across the fixed income world equally. This morning’s report about the structured products group at JP Morgan showed a total 40% cut despite the fact that the group is not directly involved in mortgages. At Merrill bonus payments may drop by 80 percent for traders specializing in mortgage bonds and collateralized debt obligations, according to Bloomberg. Other groups, however, will not be immune. “Bonuses may drop 20 percent for interest-rate traders and 60 percent in the New York-based firm's corporate bond unit,” the people who gave Bloomberg this information said.

Merrill Lynch to Cut Fixed-Income Bonuses, People Say [Bloomberg]

In the latest round of bonus wipe-outs, it seems the JP Morgan’s structured credit group is feeling the pain of the credit crunch in its bonus numbers this year. Nearly every member of the small group will see it’s bonuses decline this year as compared to last year, with the total year end incentive pay for the group declining by more than 40%, according to information obtained by DealBreaker. While salaries for the group were slightly higher this year than last, the year end incentive pay numbers are dramatically lower, meaning that nearly every member of the team will receive less total compensation this year. (Two lucky souls, who are not among the top paid members of the structured credit group, are receiving more this year than last year.)

Keep in mind that these compensation numbers are provided by readers. We want more! Please email us your bonus information or just the latest bonus rumors! Send it to tips@dealbreaker.com. JP Morgan would not comment on compensation numbers.

The bonus conversation have begun. We’ve heard word that some folks at Goldman are getting the news today. Yesterday’s big news came from Bear Stearns, where at least some were told that with bonus their total compensation would be between 13% and 16% smaller than last year.

Send us your bonus news and rumors: tips@dealbreaker.com. Your anonymity will be preserved.

Goldman Sachs is set to pay Lloyd Blankfein $75 million in stock and cash this December, $20 million more than he took home last year. How groundbreaking. Seriously, a Goldman employee being paid a ton of money, while Bear Stearns tries to cover up the fact that last week it bounced 15,516 checks at the same time, is utterly revolutionary. Personally, even though he claims not to need our pity, we feel sorry for Blankfein. How boring must it be to come into the office every day, push some papers, twiddle some thumbs and know with the highest degree of certainty that you’re going to get a huge bonus, without fail? Wouldn’t it be more fun, or at least more exhilarating, to be constantly wondering, a) Forget about bonus—will today be the day I get fired? B) If I do get fired, how handsomely will I be rewarded for fucking up so badly? A lot or a little? C) Would it be bad if I laced this big bag of pot with some embalming fluid and smoked the whole thing over lunch? Or bad in a good way? That guy's masking his ennui and we know it.

Goldman CEO In Line For $75 Million Bonus [NYP]

For months now we've been talking about the likely downward trend in bonuses on Wall Street this year. And now UBS has declared it a reality. They've announced a cash pay cap of $750,000 for investment bankers and traders, with additional compensation to be paid in stock.

Send your bonus rumors and, if you want, actual information to tips@dealbreaker.com. If your bonus is high enough, we may even let you buy drinks for Bess Levin.

A Salary Cap For Bankers: $750,000 Max [Wall Street Journal]

The Wall Street Journal’s question of the day today is “What size bonus do you expect to get this year?” One response was: “I do get a bonus, and it will be much larger than last year’s owing to both company and individual performance ratings, plus a promotion.” Another: “Bonus??? What bonus??? Not sure if $92.17 counts as a bonus.” Clearly the first came from a second-year at Goldman, well-practiced in the fine art of touting the Goldman name, engaging in auto-fellatio and typing all at the same time. But what of the second? The options seem limitless. Obviously we could simply peg it to a MER employee and call it a day, but let’s think outside the box for a second. It could be someone from BSC. It could be Sowood Capital manager Jeff Larson. You people have the resources to nail this one.

What size bonus do you expect to get this year? [WSJ]

Oh noes! South African breeding operations like Leigh Fletcher’s, which provide hundreds of lions each year for hunters like you and me to stalk and kill in an enclosed area for sport, are being shafted by both animal rights groups and the government, the god damn government. This matters because, in turn, you and I—people who love to slay giant cats that don’t have a fighting chance—are being shafted. Starting Feb. 1, a new law will require that lions roam free for TWO YEARS before they are hunted, so they can "adapt to the wild before they are killed, allowing for a fair chase," a new rule that kowtows to pressure from animal lovers who, so far as we can see, have a problem with canned hunting. Prices are going to skyrocket and some analysts are predicting that in a few short months, it may cost more than $35,000 for one measly catch. This means that I’ll only get to shoot one lion per year, and based on 2006’s bonus numbers, Goldman Sachs employees, on average, will be able to afford to kill less than eighteen. Unless of course they decide to pool their money and buy Bear Stearns, in which case that number falls to zero. Or skyrockets to 15,516, depending on how flexible you are about what kind of animal you want to hunt in a small enclosure with no chance of escape.

Hunting Lions Bred in Captivity May Soon Cost More Than $35,000 [Bloomberg]

"Worst paid employees" is not exactly a desirable reputation for a Wall Street firm looking to recover from huge losses and a chaotic, messy chief executive exit. But Merrill Lynch may be stuck with that unless it dramatically increases its compensation costs in the fourth quarter.

Reuters has run through the earnings reports for Wall Street compensation numbers, and the picture isn't pretty. Three out of five firms set aside less money for compensation in the first three-quarters of this year than they had last year. Only Goldman Sachs and Morgan Stanley have set aside more.

Interestingly, there has been some jockeying for position on Wall Street compensation. Last year, Merrill also was at the bottom of the list for the first three quarters. But it was neck-and-neck with Bear Stearns. This year it is close to $18,000 short of Bear. Morgan Stanley has moved ahead of Lehman, switching second for third place.

Of course, many of these firms may simply be engaging in managing their balance sheets and investor expectations by lowering compensation costs in what was a rough third-quarter for much of Wall Street. Indeed, Merrill all but promised those costs would jump in the third quarter. But if losses from missteps in the credit and derivatives markets are even worse than expected—and most analysts who have looked at the issue have predicted even greater losses at Merrill—that may prove difficult.

The compensation numbers are closely related to per employee revenues, Reuters writes. "Goldman is the top with revenue of nearly $1.2 million per employee for the year to date, while Merrill is at the bottom of the heap, with just $311,916 of revenue per employee," the report says.

After the jump: we run through the Reuters numbers from lowest to highest, with comparisons to last year's first three-quarters compensation figures.

Merrill on track to offer lowest pay on Wall Street [Reuters]

One of the things that Merrill Lynch did to pare its losses in it’s disasterous third-quarter is to dramatically slash compensation costs. Merrill Lynch recorded just under $2 billion on compensation and benefits costs during the third quarter, about half of what of it said it spent during the same period a year ago and less than half of the $4.76 billion it recorded for second quarter of 2007. At the same time, the bank’s employment rolls have grown to 64,200, an additional 8,900 more than a year ago.

Now some of this might be simply accounting hocus-pocus, attempting to reduce costs so that their no-good, very bad fiscal quarter doesn’t look quite so bad. Indeed, Merrill admits as much when it says it may have to accrue compensation costs at higher levels in the fourth quarter. To the extent that this is true, they’re just using phony numbers, which is hardly inspiring in a bank that seems to not to have been too good about estimating losses.

But it’s a grim sign for investment bankers awaiting year-end bonuses. Indeed, it seems that Merrill bankers may lose out in the bonus race this year to colleagues at competing firms. Goldman, for instance, actually increased the amount it recorded for bonus and salary compensation this year.

Even the re-assuring noises the bank is making are, well, less than re-assuring.

“Merrill Lynch remains focused on paying its best performing employees competitively,' the company said in a statement. But apparently it believes it doesn’t have very many of these “best performing employees” this year.

Update: We're not sure if this will make our lads and lasses at Merrill feel better or worse. But here's news that white Merrill's compensation is shrinking, it's not shrinking as fast as earnings. That means the stampeding horde may get a larger portion of the smaller pie. But, of course, since the pie is smaller, the slice will still be smaller than last year.

Merrill Lynch cuts compensation in half [Thomson Financial via CNNMoney]

This is horrifying—the securities firm that just lost $2.24 billion in one quarter is now saying it may be reducing year-end bonuses. Never have we ever been so inclined to say, WTF, O'Neal? WTF. Oh wait, hold on: MER “remains focused on paying its best performing employees competitively.” So what all you Lynchies need to do is ask yourselves, “How much did I suck this quarter, and was it more or less than the guy to my right/left?” Should give you a decent idea about what to expect.

Merrill Lynched [FT Alphaville]

And it seems to be, roughly:

- Don’t monumentally fuck up--> get a nice bonus.

- Screw things up beyond all of our wildest hopes and dreams--> don’t get a nice bonus.

Reuters reports that Bear Stearns’s nine-month compensation fell 6 percent to $3.10 billion ($199,730/employee). Payout for all of last year was $4.34 billion. Anyone who can correctly identify the event that may have imparted losses on BSC’s trading, financing and hedge fund businesses is in for a treat.

On the other side of James Cayne’s golf game: Morgan Stanley, which set aside $13.4 billion for the first 9 months, up 25 percent and set to match or exceed last year’s $14.4 billion ($280,000/employee) and Lehman Brothers, which set aside $7.33 billion for the first 9, up 14 percent and about $255,000 per employee.

Goldman, because John Carney predicted it would, is also set to increase bonuses ($565,000 per employee), though this would be the case even if Lloyd Blankfein’s top secret hair restoration project went over budget. GS said it reserved $16.9 billion in the first nine months, up 21 percent from last year’s period and already exceeding the $16.5 billion set aside for all of 2006.

Goldman 3rd quarter shows bonuses poised to rise [Reuters]

Accounting and finance workers were anxious in June, CFO.com reports. Despite record bonuses this summer, the Hudson Accounting and Finance Employment Index fell sharply last month. Compared to May, more of those surveyed believed their firms would lay off employees, more people were unhappy with their current jobs and more people believed their personal finances were getting worse.

In response to the question: “Over the course of the next few months, will your company be hiring more workers, laying off workers, or making no change in the workforce?” 19.1% of responders said that their firms would lay off workers, compared to 14.8% in May.

More illuminating perhaps, is the 12 month Index graph, here. There is no consistency whatsoever in the protean Accounting and Finance sector where, depending on the month, your coworkers are either hypochondriacs or blind optimists.

Finance-Worker Confidence Takes a Plunge [CFO.com]

The official anecdotal reports are in, and as it turns out British bankers appear to be spending their boom year bonuses just as frivolously as their American counterparts.

A few examples from the Washington Post's big write-up of the 'Brit-erati' (liberally excerpted with all the boring parts stripped away):

Mark Alexiou, owner of trendy Mayfair nightclub Pangaea, said a banker customer recently tried to pay the $36,000 check for an evening of cocktails with his credit card. When the bank authorization wouldn't come through, one of the man's buddies stepped in and put the bill on his card, as casually as he might order another dish of cashews.

"Life is pretty, all right," said Tayo Awagboro, 24, a derivatives trader who dropped a relatively modest $1,400 on champagne and vodka at Pangaea one recent Saturday night. Awagboro, who recently moved to London from Nigeria, said London's financiers "work hard but play hard, too."

At One Hyde Park, a luxury apartment complex that the British media have dubbed the world's most expensive address, the cheap apartments are going for $40 million and the penthouses are expected to fetch more than $100 million each.

Lawrie Inman, 25, a futures trader, said he made $1.4 million in one particularly good hour last year.

"I realize how lucky I am; I can take a really nice holiday or buy a Porsche," said Inman, who does drive a Porsche 911 and wears jeans and a T-shirt to work.

One hundred million dollar apartments? Thirty-six thousand bucks for table service at a nightclub? It's like New York City only stupider.

Oh, and apparently they like to call themselves "the haves and the have yachts." Which pretty much means you can call them douchebags.

Nouveau Riche Turn London Into 'Brit-erati' Paradise [Washington Post via TBO.com]