Cash bonuses fell across Wall Street during a challenging 2023, according to a new report, but some bosses were able to buck that trend.
Cash payouts for New York City securities employees dropped by an average of 2% to $176,500, according to estimates released Tuesday by New York State Comptroller Thomas DiNapoli. He attributed that caution to "market volatility" and an influx of younger workers who pulled down the average.
The caution didn’t suppress cash amounts that went to some top executives at Wall Street’s biggest banks. Those bonuses were up for the CEOs of Goldman Sachs (GS), Morgan Stanley (MS), Citigroup (C) and Wells Fargo (WFC), according to recent filings.
Two exceptions were JPMorgan Chase (JPM) CEO Jamie Dimon, who had a cash bonus of $5 million that was unchanged, and Bank of America (BAC) CEO Brian Moynihan, who didn’t receive his bonus in cash. Dimon’s overall compensation rose, while Moynihan’s dropped.
Other top bank executives saw their cash bonuses increase. They include three of CEO David Solomon's top lieutenants at Goldman Sachs, including chief operating officer John Waldron. His cash bonus rose 30% to $11.26 million.
The past year was a challenging one across all of Wall Street as clients turned cautious about everything from the direction of interest rates to relations with China to the larger US economy. In fact, it was the worst year for dealmaking in a decade.
Investment banking revenue at the five big banks with sizable Wall Street operations fell by an average of 9% last year. The portion of these fees tied to advice given on mergers or acquisitions declined even more, by 21% on average.
Some executives even had to walk back their talk of "green shoots" after the hoped-for surge in deals failed to materialize.
A lot is riding on a Wall Street revival that sticks in 2024. That's because banks expect to see their traditional lending income drop as demand falls and margins get squeezed.
Deals are picking up significantly compared to this time last year after a string of major deals announced in the US, including credit card lender Capital One (COF) saying it would acquire rival Discover Financial Services (DFS) for roughly $35 billion.
These pacts could mean hundreds of millions in new fees for some of the biggest banks. Morgan Stanley, Goldman, JPMorgan, Bank of America, and Citigroup all had a hand in at least one of the transactions thus far in 2024.
The fortunes of these firms contribute mightily to the fortunes of New York state and New York City, DiNapoli’s office said Tuesday.
The securities industry employed 198,500 workers last year in New York City, a 3.6% increase from 2022. Bonuses accounted for 7% of total tax collections for New York City in the city’s 2023 fiscal year.
While the city remains the hub of finance in the US, its share of the industry’s jobs has been declining over time, according to DiNapoli’s office. The peak was 2000, and employment is now 1.3% lower than it was that year.
Other parts of the US, particularly Texas, have emerged in recent decades as huge employment centers for the finance industry. In December, Texas actually employed more finance workers than New York state, according to Bureau of Labor Statistics data.
The New York comptroller told reporters Tuesday that lower bonuses mean lower tax revenues for the state and New York City but "there's no negative drag" given that both government offices had anticipated larger declines in their budgets.
Wall Street's total cash bonus pool of $33.8 billion for 2023 was up slightly by $100 million from a year ago but down 21% from 2021 and 9% from 2020.
"We need New York to continue to be the global capital for finance because we all benefit from Wall Street when it is profitable," DiNapoli added.
David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.
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