"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]
Wall Street Per Employee Compensation. From Worst To First.
MERRILL LYNCH: $181,308 (2007) vs. $247,052 (2006).
BEAR STEARNS: $199,729 (2007) vs. $247,244 (2006).
LEHMAN BROS: $254,664 (2007) vs. $259,697 (2006).
MORGAN STANLEY: $280,112 (2007) vs. $257,920 (2006.)
GOLDMAN SACHS: $565,725 (2007) vs. $544,001 (2006).