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Big Bonuses Still Flow on Street

Bonuses paid to securities industry employees climbed 17% to an estimated $20.3 billion in 2009, but Wall Street is much more wary of public perception.



) -- A report on Wall Street bonuses on Tuesday drove home the fact that banks' recent profits were earned by people, not by faceless corporate entities.

As the credit and stock markets turned an about-face last year, bonuses paid to securities industry employees climbed 17% to an estimated $20.3 billion, according to the New York state comptroller's office. Overall compensation at the biggest firms grew faster, and overall industry profits may have reached $55 billion, almost triple the previous record.

But the report on pay also highlighted that Wall Street is sensitive to the outrage at its swift recovery, as workers in other industries continue to suffer. Salaries and bonuses averaged about 40% of net revenue in 2009, compared to about 50% in previous years.

"Wall Street is vital to our economy, and the dollars generated by the industry help the state's bottom line," Comptroller Thomas DiNapoli said in a statement. "But for most Americans, these huge bonuses are a bitter pill and hard to comprehend. ... Taxpayers bailed them out, and now they're back making money while many New York families are still struggling to make ends meet."

DiNapoli noted that estimating the size of bonus pools has been made more difficult by dramatic changes in compensation practices.

For instance, firms have been weighting more pay in stock, some of which can't be cashed in for a year or several years. Some firms have also shifted to higher base pay, rather than stacking up bonus incentives that reward short-term risk without considering the long-term impact. Other tactics like deferred cash payments and clawback provisions also make it difficult to estimate the actual value of what employees will ultimately receive.

The comptroller's office also noted that Wall Street firms "devoted a much lower share" of revenue to pay, compared with previous years.

But while

Goldman Sachs

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received a lot of attention for paying CEO Lloyd Blankfein "just" a $9 million bonus -- a sliver of the $68.5 million he received in 2007 -- and other top executives at

Morgan Stanley

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Bank of America

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have made waves by forgoing bonuses in recent years, those high-profile earners aren't the only ones on the Street.

Legions of traders and investment bankers underneath them are clamoring for better pay packages while returning their companies to profitability. For instance,

American International Group's

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recently departed top lawyer, Anastasia Kelly, is just one example of the overworked underlings who feel they deserve better compensation. Kelly left because of government restrictions on her salary.

"I've spent my life working myself up a career ladder to where I am, and I had been working 18 hours a day, seven days a week, and killing myself," Kelly recently told


in a

Q&A about her controversial departure. "... For someone to say, 'I think you're doing a great job, Stasia, but the American people hate you and therefore we think you should make no more than $500,000 a year' -- there's no logic to that."

It's also worth noting that

JPMorgan Chase

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CEO Jamie Dimon is expected to receive about $17 million in stock bonuses, and the pay package of

Wells Fargo's

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top gun, John Stumpf, beat out all other big-bank competitors. Wells doesn't have a huge securities-trading operation, but Stumpf is due to receive $18.7 million in cash and stock for 2009, up 64% from 2007.

Perhaps the overall climb in pay shouldn't come as much of a surprise, because big banks' year-end reports confirmed what everyone had been observing for months: Wall Street was earning once again in 2009, after the severe losses and chaotic events of the previous two years.

In 2008, the securities industry lost a record $42.6 billion, and pay dropped a dramatic 47%. Coming from that low, and the record $32.9 billion in pay that was shelled out in 2007, it's been a tumultuous few years for Wall Street and its employees.

Still, U.S. unemployment is hovering near 10%. And though banks have been

hiring, an array of major non-financial firms are still

laying off employees, including


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Continental Airlines

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Boston Scientific

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The taxpayers and employees of those corporate behemoths are still reeling from the effects of the Great Recession. Some economists predict that many of those jobs may never come back -- in housing, manufacturing, administrative work, and other areas that were waning even before the crisis began.

-- Written by Lauren Tara LaCapra in New York