Wall Street bonuses are expected to decline for the third consecutive year, reflecting a period of busted mergers, limited trading activity and muted hedge fund returns.
The payouts are projected to be from 5 to 10 percent lower this year, according to an annual report to be released on Monday by Johnson Associates, a compensation consulting firm. Bonuses fell about the same amount last year from 2014. The projection confirms a report last month by the New York State comptroller that said firms set aside 7 percent less for bonuses through the first half of this year compared with last year.
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While mergers and acquisitions have been active (and even hit record levels in 2015), the bankers who advise on the deals get paid largely when the deals are completed. This year, antitrust officials thwarted a number of large mergers, including Halliburton's $35 billion bid for Baker Hughes, as well as the consolidations of the health insurance companies Anthem and Cigna, and Aetna and Humana.
Pfizer and Allergan abandoned their enormous deal after the Treasury Department announced new tax rules, killing $200 million in fees that the bankers were supposed to collect.
In addition, choppy markets damped stock trading activity and prevented skittish companies from making their debuts as public companies, except for a few prominent offerings. Investors dumped hedge fund holdings because of poor returns and high fees.