Business Area Percent Change from 2006 Investment Banking 10 - 20% Prime Brokerage 15% Equities (Plain-vanilla) 5% Equities (Derivatives) 20% Asset Management (equities) 10% Asset Management (Fixed Inc) 5% Senior Firm Management -- Investment Banks flat to 5% -- Commercial Banks minus 5% to flat Corporate Staff -- Investment Banks flat to 5% -- Commercial Banks minus 5% to flat High Net Worth 10% Fixed Income -- Plain Vanilla minus 15 to minus 5 % Commercial Banking minus 10% to flat Retail Banking minus 10% to flat Private Equity 20% and higher Hedge Funds Flat to 10%Johnson Associates regularly monitors compensation trends among a wide range of commercial and investment banks, and financial services companies. Its quarterly compensation analysis is based on the firm's ongoing monitoring of the financial services industry and public data from 10 of the nation's largest investment and commercial banks and seven of the largest asset management firms. Johnson noted that Wall Street compensation had been increasing steadily since 2003, following declines in both 2001 and 2002. For example, an average managing director at an investment bank should earn about $1.7 million in incentives this year, compared with $1.5 million last year. Investment banker's pay may have finally reached the market's peak. "Looking ahead, we expect 2008 will be a difficult and challenging year on Wall Street," says Johnson. "Given the ongoing credit and housing market woes, we don't expect to see staffing levels increase next year and incentives throughout the industry could be down 15 to 20 percent for the first time since 2003." Other findings include:
-- Wall Street firms implemented soft "hiring freezes" as weakness in the credit and housing markets created a lot of uncertainty. -- Companies continued to make heavy use of restricted stock this year. However, the use of broad-based stock options is expected to return to favor in 2008 as market multiples return to historic norms. -- More favorable termination and severance provisions are expected to be put into place at many Wall Street firms in 2008.Johnson Associates is a boutique compensation consulting firm specializing in the design of annual and long-term incentive plans and establishing appropriate market pay levels. The firm is well-known for providing candid advice and for its expertise and in-depth knowledge of the financial services industry, including major investment and commercial banks, asset management firms, hedge funds and other alternative investments, insurance companies, and brokerages. For more information, visit www.jaiconsulting.com
Contact Information: Contact: Ed Emerman 609-275-5162 eemerman@eaglepr.com