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Wall Street year-end incentive awards to improve in 2012, says Johnson Associates

Wall Street professionals can expect to receive flat to moderately larger year-end incentive payouts compared to the previous year, according to an annual compensation analysis released by Johnson Associates.

The analysis found that this year's incentives results are an improvement over 2011, when incentives fell sharply throughout the financial services industry.

"The recovery in financial services continues to be a struggle, and while incentives will be modestly up, few professionals will have reason to cheer.  With wide variations in outcomes, and an uncertain outlook, the bonus season will be rightfully subdued," says Alan Johnson, managing director of Johnson Associates. "Following a year when year-end incentives declined by as much as 30 per cent, the fact that many firms are able to keep this year's bonuses flat or slightly larger, is notable."

The Johnson Associates third quarter compensation analysis shows that overall year-end incentives, which include cash bonuses and equity awards, will be flat to moderately larger (five to 10 per cent) this year compared to last year. There will be significant variation by firm and business.
 
Fixed income traders, who were hardest hit last year, will be the winners this year. Their year-end incentives will jump 10 to 20 per cent. On the other hand, investment bankers and equities traders will see their year-end bonuses either flat or trimmed by 10 per cent or more.  Incentive payouts for the rest of the financial services industry, including prime brokerage, asset management, high net worth, retail and commercial banking and hedge funds will be flat or slightly higher (five to 10 per cent) than last year.

"Looking ahead to 2013, we expect to see a continued modest recovery in many segments of the financial services industry. Barring further economic weakness, incentives for investment and commercial bankers and those in asset and wealth management and alternatives could rise by five to 15 per cent next year. Additionally, firms will continue to reduce headcount in the US but will add to staff in emerging markets where many companies are expanding or shifting their business operations," says Johnson.

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