NEW YORK Executives at Lehman Brothers Holdings Inc., TD Securities Inc., and UBS Warburg expect to cut bonuses as much as 30% this year, said people familiar with the firms.
The bankers, analysts, and traders still around to collect those yearend payments may consider themselves lucky, analysts say, because Wall Street firms such as Merrill Lynch & Co. have said they may fire more as revenue slumps.
Those bonus reductions translate into an industrywide drop of $4 billion in the cash and stock payouts that can account for three-quarters of the compensation for top employees. Last year bonuses totaled a record $13.3 billion, according to New York State.
Im starting to hear the numbers I thought I would: 25% to 50% below last year, said Richard Lipstein, a headhunter who works at Gilbert Tweed Associates in New York.
With Wall Street earnings in their longest decline in six years, securities firms need to cut pay, which accounts for about half of their expenses. Morgan Stanley Dean Witter & Co. plans to pay more of its bonuses in stock, to conserve cash. Firms have also curtailed travel and entertainment spending.
Spokesmen for Lehman and UBS declined to discuss the bonus issue. Michael Sherman, a TD Securities spokesman, said bonuses are a function of earnings.
At Lehman, which pays bonuses in December after its fiscal year closes in November, some divisions will cut bonuses 30%, said people at the investment bank, whose profit in the first half fell 11%.
Managers at TD Securities have told some employees to count on a 25% cut in the yearend payments, said a person at the firm.
At UBS Warburg, where first-half earnings fell 31%, the decline could be as much as 30%, a person at the unit of Switzerlands UBS AG.News