Bonuses decline on Wall Street

This year’s bonus season on Wall Street will yield less money for securities industry employees, according to a new estimate from Comptroller Thomas DiNapoli.

Cash bonuses are expected to drop 14 percent to a total of $19.7 billion, according to the estimate. In addition, the profits of broker-dealer operations of New York Stock Exchange member firms did not exceed $13.5 billion, less than half of the $27.6 billion earned in 2010.

This would be the second year in a row profits dropped by more than half.

A number of large firms announced reductions in cash bonuses in 2011, with several reporting reductions of 20 to 30 percent. The average cash bonus declined by 13 percent to $121,150 in 2011, according to the comptroller’s office.

The average salary in New York City’s securities industry, including bonuses, rose 16 percent to more than $361,000 in 2010. Data for 2011 is not yet available.

“Cash bonuses were down in 2011, reflecting a difficult year on Wall Street,” DiNapoli said in a news release. “Profits were down sharply and securities firms in New York City resumed downsizing in the second half of the year. The securities industry, which is a critical component of the economies of New York City and New York state, faces continued challenges as it works through the fallout from the financial crisis and adjusts to regulatory reforms.”

Between April 2011 and December 2011, the industry shed 4,300 jobs. The sector lost 28,000 jobs during the financial crisis and had regained 9,600 before cuts resumed last year.

Personal income tax collections declined less than the overall bonus pool, according to the comptroller’s office. That’s likely due to payment of bonuses deferred from earlier years.

The increased use of deferred pay should create a pipeline of bonuses in future years, according to the comptroller. That should reduce volatility in tax payments.

Contact Tampone at ktampone@cnybj.com