Wall Street Workers Get Bonuses, Many Still Unhappy (Update1)

By Christine Harper

Jan. 27 (Bloomberg) -- More Wall Street employees received bonuses for 2008 than were expecting to in October, though many remained unhappy with them, according to an online poll.

EFinancialCareers.Com said about 79 percent of workers who responded to an online poll this month said they received a bonus for 2008, more than the 66 percent of respondents who expected to get a reward in October. Still, 46 percent said they were dissatisfied with their bonus.

“What it shows is the bonus culture is very deep-set in the securities industry,” said John Benson, founder and chief executive officer of the Web site, a unit of Dice Holdings Inc. “There’s an entitlement culture amongst a number of people in the industry, which I think in the current environment is very misplaced.”

Wall Street’s system of paying year-end bonuses to reward workers is under criticism after the worst financial crisis since the Great Depression led to record losses and forced the government to pump taxpayer money into banks. Former Merrill Lynch & Co. Chief Executive Officer John Thain has drawn criticism for accelerating bonus payments before the firm’s sale to Bank of America Corp. was completed.

About 900 U.S. users of the financial jobs Web site responded to the survey conducted Jan. 7-12. In October, 1,300 people responded, and 36 percent said then that they anticipated a higher bonus.

Most of the people who said they were unhappy with their bonus, 89 percent, had five years or less experience, the survey found.

Merrill, which was acquired by Bank of America Corp. this year and has reported six straight quarters of losses, reduced 2008 compensation by 6 percent to $15 billion from $15.9 billion in 2007. Year-end bonuses typically account for the majority of compensation.

Flexibility

“I have been a defender of the bonus system in the past because it provides banks with a degree of flexibility on their cost structure,” Benson said. “I think most people on Main Street would say their organization incurred losses of this size that very few people in the organization if anybody would receive bonuses at all.”

Most of the people who reported a drop in their bonus said it fell between 11 percent and 50 percent, while the biggest portion of increases were 10 percent or less, the survey found.

Many firms instituted changes to their bonus systems and reduced average compensation as revenue fell. The most senior executives at firms including Goldman Sachs Group Inc. and Morgan Stanley turned down bonuses.

Firms including Morgan Stanley, Credit Suisse Group AG and UBS AG also have added so-called clawback provisions that set aside portions of workers’ bonuses that can be recouped in later years if an employee leaves or is found to have behaved in ways that are harmful to the company.

“You’ve got as good an opportunity today as you’re ever going to have for this culture to change,” said Benson. “There needs to be a clearer risk-reward balance, rather than reward- reward.”

To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net.

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