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Wednesday November 22 11:49 AM ET
Wall St Professionals Eye Rich Bonuses
By Kristin Roberts
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. (NYSE:TIF - news), 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 - news) 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 - news), 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 -
news) has lost 8.62 percent so far, and the Wilshire 5000 index (^TMW -
news), 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
(news - web sites) 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. (NasdaqNM:NITE - news), 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. (NYSE:BSC - news), 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.'' |
