HomeBusinessHere’s how Wall Street bosses are hoping to get rid of laggard bankers this year
Here’s how Wall Street bosses are hoping to get rid of laggard bankers this year
November 16, 2023
As Wall Street faces another year of sluggish dealmaking, top brass are hoping another disappointing bonus season will push low performers out the door.
After hiring employees in droves during the pandemic to process a big flurry of deals, financial firms are now struggling to shed extra staff. Some like Citigroup are enacting aggressive cuts while Goldman Sachs has reinstated an annual culling ritual.
But still others – who are aiming to take a gentler approach – are hoping a bad bonus will be enough to encourage a banker to pack his desk into a cardboard box and swipe out his security badge one last time.
One senior Wall Street executive said bonus season is often a reality check, and that when bankers start comparing end-of-year payouts it can be a wake-up call.
“Everyone thinks they are a top performer,” the source said. “Many aren’t self-aware.”
Earlier this week, it made headlines that Goldman was looking to reward its top performing traders and dealmakers despite the bank’s latest dismal quarterly earnings report. Nevertheless, some dismissed that as the usual practice.
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“They always pay the top performers,” the source said. “They always want to make sure the top people don’t leave.”
Overall, bankers this year are facing payouts that could shrink as much as 25% as dealmaking dries up amid surging interest rates, according to a survey released this week by Johnson & Associates.
While that sounds rough, the laggards might not be getting a bonus at all.
Over the last few years, those on Wall Street have been whipsawed when it comes to bonuses — which typically make up a majority of a financier’s salary.
Just two years ago, firms were handing out record bonuses as financial giants like Goldman Sachs and JPMorgan grappled with a dire lack of bankers amid a massive labor shortage.
In 2021, the historic tide of mergers, IPOs, spinoffs and other big strategic deals pushed banker bonuses 30 to 35% higher than their bonuses from 2020. But the good times came to an end last year with some bonuses falling by as much as 45% as financiers fretted about the possibility of a looming recession. Unfortunately for those on Wall Street, that downward trend is expected to continue.