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From the Office of New York State Comptroller
Thomas P. DiNapoli
WALL STREET BONUSES DECLINED IN 2011
Industry Profits Down by Half from Prior Year
Cash bonuses paid to New York City securities industry employees are forecast to decline by 14percent to $19.7 billion
during this year’s bonus season
, according to anestimatereleased today byState Comptroller Thomas P. DiNapoli.
Cash bonuses were down in 2011, reflecting a difficult year on Wall Street
,” DiNapoli said
Profitswere down sharply and securities firms in New York City resumed downsizing in the second half of the year. The securities industry, which is a critical component of the economies of New York Cityand New York State, faces continued challenges as it works through the fallout from the financialcrisis and adjusts to regulatory reforms
The Comptroller also estimates that profits for the broker/dealer operations of New York Stock Exchange member firms, the traditional measure of profitability for the securities industry, did notexceed $13.5 billion in 2011, which would be less than half of the $27.6 billion earned in 2010. Thiswould be the second year in a row that profits dropped by more than half.While the industry had a strong first half with profits of $12.6 billion, it lost $3 billion during thethird quarter. Underlying profitability at the large firms was even weaker than reported becauseprofits were boosted by accounting adjustments. The industry earned a record $61.4 billion in 2009with the benefit of federal assistance after losing a record total of $53.9 billion over the course of 2007 and 2008.While a number of large firms announced reductions in cash bonuses for 2011 (with several firmsreporting reductions in the range of 20 to 30 percent), personal income tax collections indicate asmaller decline in the overall cash bonus pool. This is likely due to the payment of bonuses that hadbeen deferred from earlier years. The increased use of deferred compensation should create apipeline of bonuses that will be paid in future years, which will reduce volatility in industry taxpayments.
releases an annual estimate of cash bonuses paid to securities industry employeeswho work in New York City during the traditional bonus season. Bonuses paid by New York City-based firms to their employees located outside of the City (whether in domestic or internationallocations) are not included.
s estimate is based on personal income tax trends andreflects cash bonuses and deferred compensation for which taxes have been withheld. The estimatedoes not include stock options or other forms of deferred compensation that have not been realized.