A word of caution for Wall Streeters planning how to spend their year-end bonuses: This may be as good as it gets for a while.
Bonuses at big banks and investment houses are set to grow again thanks to a blockbuster year of historic IPOs, AI financings, and zippy markets, according to pay consultancy Johnson Associates, whose annual bonus report is required reading across the financial industry. But the AI trade is now starting to sour, interest rates are rising, and last week’s Democratic gains may darken the backdrop for 2027.
Even this year’s bumper crop will be shared unevenly, tilted more heavily toward the best performers rather than spread “peanut-butter-like” across and within divisions, Alan Johnson told Semafor. “Firms now value the best people more than they ever have, and value the average person less,” he said. “Nobody is going to wring their hands if an average performer is complaining — ‘don’t let the door hit you on the way out.’”
Financial executives are keen to avoid the trap of 2021, when their efforts to gift-wrap the fruits of a banner year as special, one-time bonuses got baked into expectations anyway, with predictable howling in 2022.
— Liz Hoffman
