Compensation levels for Wall Street executives won't be nearly as frothy as this year's markets, according to financial executive recruiting specialists from G.Z. Stephens, New York.
Despite the record-breaking stock market, earnings among financial services firms have not reached the levels they saw in 1993, so compensation won't match that year either.
According to partners Joan Zimmerman and Howard Gabler, firms had begun stroking their best staffers in the summer, rather than let them sweat out the year-end review period, which reflects a shallow talent pool in critical areas. Additionally, the allocation of incentives will be a good indication about who's in and out at a firm, with the value-added staff getting bonuses 30% to 40% higher than last year and others remaining flat or only 10% higher, they said.
The tight bonus situation will make it clear who's considered a value-added player and who's seen a run-of-the-mill staffer, according to the recruiters.
Domestic equity staff will see the majority of the higher bonuses, thanks to a record-breaking quarter, followed by bankers who handled mergers and acquisitions, according to Ms. Zimmerman and Mr. Gabler. Bonuses in international equity will be mixed but will not keep pace with the domestic equity or mergers & acquisitions areas, and performance incentives for fixed income will be largely flat.