Bonus season doesn’t look bright for private equity, Wall Street: report

The financial community may not have a happy holiday, as this year’s bonus season may not look like last year.

Wall Street compensation consultancy Johnson Associates is issuing a cautionary signal to fund managers, bankers and brokers when the time comes for these annual audits.

Payouts to private equity fund managers could fall by up to 15% this year from 2021, while public equity investment managers could see cuts of up to 25%, according to the Wall Street Journal.

Investment bankers at the biggest institutions are expected to absorb the steepest cuts of up to 40%, the company added.

ACCOUNTING ERRORS IN COSTING OFFICERS THEIR BONUSES UNDER THE SEC RULE

Wall Street sign with cash background. (istock / iStock)

The declines are expected to stem in part from inflated incentive payments resulting from last year’s record level of activity for private equity, investment bankers and others on Wall Street.

By comparison, last year was a banner year for bonuses where private equity managers saw increases of up to 20%, and investment bankers are set to see increases of 30% to 35% of their annual incentive payments, according to Johnson’s November 2021 forecast.

Wall Street floor

The trading floor of a Wall Street firm. (KBW)

WALL STREET BONUSES REACH NEW RECORD

Other reasons for the estimated drop include slower fundraising, lower transactions and falling valuations.

The company said wealth advisers who see bonus cuts of 15% to 25% could blame it on falling stock and bond prices and asset outflows as investors seek relief. security of monetary funds and cash.

NYSE Trading Room

NYSE Trading Room ((Kearney Ferguson/NYSE via AP, File)/AP Newsroom)

GOLDMAN SACHS TO RESTRUCTURE ITS COMPANIES BY COMBINING INVESTMENT BANKING AND TRADING: REPORT

Hedge fund managers could see smaller declines of 10% on average, but the company warned there would be wide variations depending on fund size, strategy and performance.

Leave a Comment

Your email address will not be published. Required fields are marked *