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Nobody panic—Wall Street bonuses may be down about 10% this year

Kids crying in vest suits
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It's that time of year again on Wall Street … bonus season!

Even though it was a good year for the stock market, it's not all champagne wishes and caviar dreams. Last year the average bonus in the industry fell by 9 percent to $146,200 according to the New York State Comptroller's Office and, after speaking with heads of trading desks, managing directors, hedge-fund-partners and others, it looks like bonuses could be down about 10 percent this year.

There are several reasons cited for this year's lower expectations, including uncertainty in the stock market and less trading activity by clients (i.e., lower fees and commissions). And, while 2015 was a record year for merger and acquisition deals — 2016 was the year for billion-dollar broken deals like Allergan and Pfizer, United Technologies and Honeywell, Canadian Pacific and Norfolk Southern, and Halliburton and Baker Hughes.

All of that means less money in … and less money in the bonus pool.

One word you hear thrown around a lot on trading floors is "stick." In Street speak, that means a million dollars.

Someone might say: Oh they took care of Robert this year. And the response might be: Really? What'd he make — two sticks?

There are still plenty of seven-figure bonuses being handed out these days, just not as many as there used to be.

Bonuses vary depending on what type of firm you're — buy side or sell side, with the buy side typically making more. An assistant making up to $50k a year will likely see a bonus of about $25k to $50k. First- and second-year analysts on the sell side would see bonuses of around $75k to $85k, while their counterparts on the buy side could see bonuses of around $150k.

It usually takes about two years to cross over to the six-figure mark. Senior analysts, VPs and executives could see bonuses of $300k to $500k. The goal is to hit half a million by age 27. So when do you get your stick? Hopefully by age 30. That's the fast track to becoming a managing director, portfolio manager or running your own hedge fund.

Beyond that, the next benchmark is a bonus of $5 million — that's what they call the REAL money. After that, you go for being a Master of the Universe — $25 million to $100 million bonus years. But that's usually when it's the check made out to you, from you...

No matter where you work — a white-shoe firm, a boutique, on the buy side or at a mutual fund — the same scene is replayed countless times on the Street: Your name is called and everybody in the office watches as you march to hear your fate. The walk is like a cross between a bride heading down the aisle and an overmatched challenger heading into the ring — expectation and fear course through your bloodstream. In an otherwise empty conference room, your boss or bosses sit stone-faced. They've worn their best bonus-day outfits, ones that are always somber and conservative.

And then you get your number.

Despite your raging blood pressure, the key is the poker face. You can't seem too happy because your boss will think he/she overpaid you. If you leave in a huff, you'll seem ungrateful. It's a dance.

So, if bonuses are down about 10 percent this year, that means there's some poor schlub who thought he was getting a stick and now he's only getting $900k. If you see him, just pat him on the back and say, "Sorry, buddy. I know it's hard out there for a pimp."

Commentary by Turney Duff, a former trader at the hedge fund Galleon Group. Duff chronicled the spectacular rise and fall of his career on Wall Street in the book, "The Buy Side." He is a commentator on CNBC's "Filthy Rich Guide" and a consultant on the Showtime show, "Billions," starring Damian Lewis and Paul Giamatti. Follow him on Twitter @turneyduff.

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