Net

Email:
Call: 201-735-4638
Text Message: 917-740-8477

John Carney
Runs this joint.
Jeff Cox
A senior writer for CNBC.com, covering the gamut of issues affecting the stock market and the economy.
Stephanie Landsman
Squawk Boxer Rebel.
Lori Spechler
A Senior Editor at CNBC, commodity trader in a former life.
Lori Ann LaRocco
A Senior Talent Producer at CNBC.

The Faces of 'Occupy Wall Street'
Occupy Wall Street has attracted people from all backgrounds.
The Greatest Trades of All Time
The following list of people showcases some of the greatest trades in the business.
Rogue Trading: A How-To Guide
There's a surprisingly consistent pattern to all these rogue traders.
25 Things Every Wall Street Intern Should Know
Some words of wisdom for all the Wall Street Interns this summer.

» Help

Subscribe to this RSS feed
Stay up to date with NetNet.

JPMorgan: Bonus Numbers Look Good But Bankers Are Wary

Published: Friday, 14 Jan 2011 | 11:42 AM ET

Text Size

By: John Carney
Senior Editor, CNBC.com

CNBC.com
JP Morgan Chase
JPMorgan revealed this morning that it has set aside $9.7 billion for compensation in 2010, an increase over last year's $9.3 billion.

But internally, managers have been working to manage bonus expectations. Employees in several areas of the bank have been told that they should expect bonuses to be modest.

The percent of JPMorgan's [JPM Loading... () ] revenues going to bonuses is also increasing, rising to 35 percent from 33 percent a year ago. But the bank's headcount has grown as well, which means that the "average bonus" has fallen slightly. Of course, "average bonus" is pretty much a meaningless concept since no one actually receives it. It's just a figment of mathematical imagination, constructed by dividing the total bonus pool by the number of employees.

It seems clear that some of JPMorgan's investment bankers will take home sizable bonuses this year, despite the talk of compensation modesty. The firm's investment banking arm saw a decline in profitability due to increased performance based compensation. So while the investment bankers took in $6.2 billion last quarter—a rise from $5 billion a year ago—profits dropped from $1.9 billion to $1.5 billion. More money + smaller profits = bigger bonuses.

What everyone is waiting to see at JPMorgan is how the bonus numbers will shake out in terms of equity versus cash. There has been a lot of talk around Wall Street of trying to better align bonuses with the long term interest of shareholders by providing at least a good portion of the year's bonus in restricted stock.

At least some employees expect that a large part of the increase in bonuses will come in the form of stock, rather than cash. Not all of them are happy about that.

"You can't make down payment on a new apartment with a restricted stock option. This will make me live like the poors for another year or two," one young-ish banker told me.