Bonus Watch ’23: Your Bonus Is Keeping Your Job

Even with the job market tightening a bit and a recession looming, some employers remain wary of cutting staff. Those employers do not boast Wall Street addresses.

“We will have layoffs in some parts of Wall Street,” [Johnson Associates managing director Alan] Johnson said, adding that job cuts may amount to 5% to 10% of staff. “I think many firms will want their headcount to be lower by February than it was this year….”

“You can expect to hear announcements regarding layoffs in the next few weeks,” Marenzi said. “There is no indication that things are about to improve in investment banking.”

The European investment banks, which have lost market share in recent years to U.S. leaders including Goldman Sachs and JPMorgan Chase, will be the first to buckle, Marenzi said.

Those who still have jobs in February won’t be enjoying themselves, either, longing for the days when they thought their bonuses would only drop 17% this year, or even 35%.

Bankers involved in underwriting securities face bonus cuts of 40% to 45% or more, according to the report, while merger advisors are in line for bonuses that are 20% to 25% smaller. Those in asset management will see cuts of 15% to 20%, while private equity workers may see declines of up to 10%, depending on the size of their firms.

“There are going to be a lot of people who are down 50%,” Alan Johnson, managing director of the namesake firm, said in an interview. “What’s unusual about this is that it comes so soon after a terrific year last year. That, plus you have high inflation eating into people’s compensation.”

“People thought this might be a more normal year after 2021 but they didn’t expect to see it go so far the other way,” Alan Johnson, of Johnson Associates, told The [New York] Post. “This is one of the top two worst years we’ve seen in the last decade.”

Not for everyone, of course.

Bond traders and sales personnel will see bonuses rise by 15% to 20%, while equities trading staff could see increases of 5% to 10%, according to the report. Traders at hedge funds with a macro or quantitative strategy could see bonuses rise by 10% to 20%.

Job cuts and smaller bonuses loom for Wall Street amid collapse in IPOs and stock issuance [CNBC]
Some Wall Street bonuses could be chopped by nearly half [N.Y. Post]
Money managers' bonuses expected to fall 15% to 20% this year [P&I]
Why Are Businesses Still Hiring as Recession Risks Mount? [WSJ]

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