Traders Poised for Soaring Bonuses While Dealmakers to See a Dip

(Bloomberg) -- Traders who carried their Wall Street units to the best year in a decade are poised for handsome bonuses. Many of their colleagues won’t be so fortunate.

Bond traders could see their year-end bonuses rise 45% or more from last year, while equities traders could see a 25% jump, according to a closely watched survey from compensation consultant Johnson Associates Inc. Debt and equity underwriters will also see a jump of 40% or more, the firm said.

The projections are even more optimistic than Johnson’s outlook from a few months ago as Wall Street firms continued their momentum in the third quarter and are on pace for $100 billion in trading revenue this year. Still, the traders may get a smaller slice of the additional revenue as firms try to keep a lid on costs.

“They had a great year and I think they’re going to get paid up significantly,” Alan Johnson, the head of Johnson Associates, said in an interview. “They probably would be a little bit higher if there weren’t the pandemic or the political or economic issues out there.”

For other businesses, bonuses will fall at least 5% -- and in some cases, much more than that. Retail and commercial bankers could see their bonuses fall 30% or more, while M&A advisers will see a drop of as much as 20% from last year.

The divergence of fortunes in year-end pay reflects the way the year has played out as thousands of staffers work from home. Banks stockpiled reserves as the coronavirus pandemic bit into the economy, and many have turned their focus to keeping costs down as they continue to ride out the cycle.

Still, the gaps in pay among divisions within a single firm could be a “shock to a system,” Johnson said. “They’ve moved, not in lockstep, but much more correlated in recent years.”

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