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Wall Street Bonuses Not Keeping Up With Profits

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Advisors’ bonuses are not maintaining the same pace as industry profit growth, according to the New York State Comptroller’s office.

The latest results of the yearly survey find that Wall Street’s pretax profits jumped 21% last year, yet the average bonus paid to employees of broker-dealers and other firms grew by only 1% to $138,210.

“Wall Street profits bounced back strongly in 2016…,” Comptroller Thomas DiNapoli explained in a statement. “Bonuses were up only slightly in New York City as the industry held the line on compensation.”

Pretax profits for New York Stock Exchange member firms, the traditional measure of industry profitability, hit $17.3 billion in 2016, the highest level in four years, according to the report. Profits were driven by cost-cutting and lower noncompensation expenses, the analysis states, including costs of legal settlements.

The average salary, including bonuses, on Wall Street was $388,000 in 2015, the latest annual data available, the comptroller says. This was five times higher than pay in other parts of the private sector, which averaged $74,000.

“Nearly one-quarter (23%) of the industry’s employees in the city earned more than $250,000, compared with 2% in the rest of the city’s workforce,” the report stated.

Other Stats

The total 2016 bonus pool for all securities industry employees working on Wall Street grew 2% during the traditional December-March bonus season to reach $23.9 billion, the comptroller’s office says, representing the first increase in the pool in three years.

The average bonus increased at a slower rate (1%) than the total pool, since it was shared by a larger number of employees than last year — 177,000 vs. 173,200.

Bonuses peaked in 2007, when they averaged $188,900. Over the past 15 years, they hit a low of $60,900 in 2002.

The rally in the stock market helped boost industry revenue by 8% in the second half of 2016, but it was not enough to offset the 9% drop in revenue in the first half of the year. Thus, revenues for all of 2016 declined by 1.3%.

Noncompensation expenses, which include legal settlements, fell by about $3.8 billion (6%) in 2016, the second year that these costs were lower. (This trend came after costs climbed by more than one-third between 2008 and 2014, mainly due to the issues tied to the financial crisis.)

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