Wall Street welcomes back fatter bonuses
Summary
Pay for bankers and traders had been weighed down by higher interest rates and economic uncertainty.Wall Street bonuses are on the rise for the first time in three years.
How big a pay bump bankers and traders get will depend on the type of work they do. Those who work in the hot market for bond sales are set to see their bonuses jump by as much as 35%, according to a study by Johnson Associates, an industry pay consultant. Those who help companies sell stock should see increases of 15% to 25%, on average, with stock traders receiving raises of up to 20%.
“If you’re in the securities industry, you better be pretty optimistic," said Alan Johnson, the firm’s founder. “Most of these firms will communicate a positive message: ‘We’re on an uptick and climbing the hill, and we’re halfway there. We expect to go even further next year.’"
Bonuses often make up a big chunk of pay for employees at financial firms, and for many had dropped the past two years after higher interest rates and uncertainty over the economy weighed on the industry.
The outlook brightened this year with a modest pickup in deal making, a vibrant market for corporate bonds and loans and a rallying stock market. Many on Wall Street hope 2025 will be even better.
President-elect Donald Trump’s return to the White House should stimulate the economy and fuel deal making through tax cuts and lighter regulations, Johnson said.
Johnson’s analysis was based on the consultant’s interviews with clients and industry contacts, along with publicly available and private data.
Merger advisers are among those on Wall Street who will get a more modest pay bump, with bonus increases of 5% to 10%, according to the study. While deals picked up in 2024, bankers’ pay had been subsidized by other Wall Street businesses during the two previous years. That is now due for a correction, Johnson said.
“That’s the curse and the benefit of being at a big firm," he said.
Banks and other financial firms have sought to rein in costs and keep their workforces lean, and aren’t going to dole out even bigger bonuses ahead of the expected upturn in business, Johnson said.
Most industry employees will be OK with that, Johnson said, especially after seeing their bonuses stay flat or drop the previous two years. “They wish they were paid more. But that’s true in virtually every industry," he said.
Write to Justin Baer at justin.baer@wsj.com
