Public RelationsBig 3 set to pay record bonuses of $30 billion this year
Goldman Sachs Group Inc, Morgan Stanley and JPMorgan Chase & Co’s investment bank, survivors of the worst financial crisis since the Great Depression, are set to pay record bonuses this year.
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The firms — the three biggest banks to exit the Troubled Asset Relief Program — will hand out $29.7 billion in bonuses, according to analysts’ estimates. That’s up 60 per cent from last year and more than the previous high of $26.8 billion in 2007. The money, split among 119,000 employees, equals $250,400 each, almost five times the $50,303 median household income in the US last year, data compiled by Bloomberg show.
The three will award more in stock and defer more cash payments under pressure from regulators to tie pay to long-term results, compensation experts said. They may still face public wrath over the size of bonuses after the government injected capital into all the major financial institutions following Lehman Brothers Holdings Inc’s collapse in September 2008.
“Wall Street is beginning to resemble Clark Gable as Rhett Butler in the film ‘Gone With the Wind’: ‘Quite frankly, my dear, I don’t give a damn,’” Paul Hodgson, a senior research associate on compensation at the Portland, Maine-based Corporate Library, said in an e-mail. “It doesn’t seem as if even political threat, disastrous PR, envy, rising unemployment rates and home repossessions is enough to get any of these people to refuse the bonuses they have ‘earned.’”