It's Business as Usual on Wall Street - Paychecks Reach All-Time Highs
Wall Street apparently hasn't learned anything from the recent financial crisis that has brought the U.S. economy to its knees. Wall Street publicly traded companies paid out a record $135 billion in compensation and benefits last year, according to a Wall Street Journal article by Aaron Lucchetti and Stephen Hough titled “On Street, Pay Vaults to Record Altitude.” That is up 5.7% from $128 billion in 2009.
"Things are shifting back to where they were before," J. Robert Brown, who studies compensation and corporate-governance issues and is a professor of law at the University of Denver, was quoted as saying.
The increase was made possible by rebounding revenues, which rose to $417 billion, another all-time high. Revenue is a major factor in compensation decisions. Firms paid out about one-third of total revenue as the compensation ratio, climbed to 32.5% last year from 31.1% in 2009.
Responding to pressure from regulators and shareholders, deferred compensation comprised about 50% of total pay, up from about a third previously, according to the article. Wall Street is trying to counter criticism that the potential for big bonuses encourages foolish risk-taking.
Many Wall Street firms also increased base salaries in 2010 to encourage focusing on longer-term performance.
Pay could be an issue at annual shareholder meetings. The Dodd-Frank law mandates that shareholders get a regular "say-on-pay" vote on corporate compensation plans.
Approximately 36 investment funds have communicated support for an annual advisory vote on pay, rather than a vote once every two or three years. This issue is expected to come up at 2011 annual meetings, according to the article.
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