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Wall St Professionals Eye Rich Bonuses
NEW YORK (Reuters) - Bad year on Wall Street? Not for those
who work there.
New York's 200,000 bankers, traders, analysts and
back-office staff expect record bonuses despite what could be
the stock market's worst year in more than a decade.
"I'm just trying to get through the end of the year without
blowing up my book," a stock trader at Cantor Fitzgerald. "It
could be a better year but, really, we got a good start to it
so that's going to carry me, and my bonus."
From Wall Street's leading strategists due for a $5 million
check to first-year clerks who expect $8,500 bonuses, the
industry's foot soldiers are eyeing nothing less than the
top-dollar paychecks that became customary over the last
decade.
"It's absolutely going to be another series of great
paydays," said Alan Johnson, managing director of New
York-based compensation consulting firm Johnson Associates Inc.
"We're staggering to the finish line, but the first months
of the year were just so good," he said. "Wall Street doesn't
make money by the market going up or down. It makes money off
things happening, and a lot happened this year."
The action on Wall Street slowed from 1999 levels in the
second half, but total trading volume, new stock offerings and
merger deals have remained strong.
The U.S. securities industry is on track to post another
record year, with $185 billion in gross revenues and $18.3
billion in pretax profits during the first nine months of 2000
-- which already beats full-year 1999 results, according to the
Securities Industry Association.
That helps translate into year 2000 bonuses that can total
25 percent to 35 percent of annual salaries of people in stock
processing operations. Ace investment bankers and top-rated
analysts can see bonuses of more than 2.5 times their annual
pay.
"For some firms, it depends on how the first half of the
year cancels out the second half," said a stock analyst at Banc
of America Securities. "But I can only say that I'm optimistic
about the bonus."
Total compensation for most securities professionals should
increase 25 to 35 percent, according to human resources
professionals and headhunters. The optimism already is showing
in Manhattan.
Tiffany & Co. (TIF.N), the quintessential name in luxury
goods and jewelry, said sales at its Fifth Avenue flagship
store grew 11 percent in the third quarter.
Luxury apartment prices in Manhattan rose 13 percent during
the first nine months of the year, led by Park Avenue, where
prices were up 52 percent, and Central Park West, up 43
percent, according to The Corcoran Group, a broker.
"Whatever happens on Wall Street, we feel immediately,"
said Chairman Barbara Corcoran, noting Wall Street clients make
up 20 percent of The Corcoran Group's client base. "People have
the money to buy larger space. Everybody wants larger space."
POTHOLES ON MAIN STREET
The money train hasn't stopped at the Main Street station,
though. Individual investors are swallowing losses from index
funds, mutual funds and their personal stock portfolios.
The blue-chip Dow Jones industrial average (.DJI) is off 9
percent so far this year. If the 30-stock gauge does not
reverse course, 2000 will be the first year since 1990 that the
it posts a negative return.
The Nasdaq Composite Index (.IXIC), heavily weighted in
technology stocks, has tumbled 29 percent this year after
rocketing more than 85 percent in 1999. The sell-off in
technology stocks has been brutal: Close to 450 stocks hit new
52-week lows on Tuesday.
Even the broader indexes are down. The Standard & Poor's
500 index (.SPX) has lost 8.62 percent so far, and the Wilshire
5000 index (.TMW), a measure of roughly the entire U.S. equity
market, has fallen 10.5 percent.
Mutual funds have been hit, too. About 67 percent, or
4,585, of U.S. stock funds are losing money so far this year,
according to fund tracker Lipper Inc.
WALL STREET STILL PAVED WITH GOLD
The volume of shares trading hands on both the New York
Stock Exchange and the Nasdaq market hit record levels this
year, making billion-share days the norm on both exchanges.
The value of U.S. mergers and acquisitions already broke a
record $1.64 trillion this year, defying predictions that
wobbly financial markets would slow the pace of corporate
marriages, according to market research firm Thomson Financial
Securities Data.
The market for initial public offerings (IPOs) has also
been strong, raising $89.6 billion through 407 underwritten
deals, business data provider Hoovers Inc. said. If the year
ended now, 2000 would be the second strongest for IPOs after
last year's total of $91.6 billion through 531 deals.
And even as securities industry analysts predict moderation
in the bull market in the first quarter of 2001, they say
employment on the Street is poised to grow along with
compensation and bonuses.
Knight Trading Group Inc. (NITE.O), the Nasdaq's No. 1
share dealer, has hired 85 employees in the United States since
September as part of a global expansion. Bear Stearns Cos. Inc.
(BSC.N), a top U.S. investment bank, is expected to give its
back-office workers and management trainees hefty bonuses to
stem defection, according to those employees.
"There is no question, it's been another great year for the
Street," said Sophie Ayres, managing director at executive
search firm Russell Reynold Associates. "In this last quarter,
we're beginning to see a little bit of a slowdown, but the
Street is still turning in great performance for the full year
and compensation will be up."
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