DiNapoli Report: Average Wall Street Bonus Up 15% in 2013
Thomas P. DiNapoli, NY State Comptroller
The average bonus paid to securities industry employees in New York City grew by 15 percent in 2013, to an estimated $164,530, according to a recent report from New York State Comptroller Thomas P. DiNapoli. That would make it the largest average bonus since the 2008 financial crisis, and the third highest on record, the comptroller declared.
DiNapoli also pegs the total 2013 pool at $26.7 billion for the traditional December-March bonus season. Over the past two years, the overall bonus pool has grown by 44 percent, driven by compensation deferred from prior years, DiNapoli also says in his report.
Perhaps surprisingly, the comptroller’s bonus and salary data are simply inferred from personal income tax withholding data during the traditional bonus season, then compared with historical data. “We then use models to infer the portion attributable to the securities industry,” Matthew Sweeney, press secretary in the comptroller’s office, told FTF News, calling the process “complicated.”
Salary data for 2012, the most recent year for which there are numbers, “includes everyone,” front, middle and back office, as well as clerical and secretarial, according to Sweeney.
Asked by FTF News for specific bonus and salary data for several job categories, including traders, operations, IT and compliance employees, Sweeney says, “We don’t have that level of data, by job title, etc.” He does indicate that there were “wide variations on both ends” for the salary numbers.
The average 2012 salary, including bonuses, paid to securities industry employees in New York City ($360,700 in 2012) was 5.2 times greater than the rest of the New York private sector ($69,200 in 2012), according to the report.
After big losses in 2007 and 2008 (of $11.3 billion and $42.6 billion, respectively), the securities industry has been profitable for five consecutive years, including its three best years on record; namely, 2009, with $61.4 billion in profits, 2010, with $27.6 billion, and 2012, with $23.9 billion, according to the DiNapoli report.
Profits for the broker-dealer operations of the New York Stock Exchange member firms, the traditional measure of profitability for the securities industry, totaled $16.7 billion in 2013, the industry reported, which is 30 percent less than in 2012, but still strong by historical standards, according to the comptroller’s report.
In response to compensation reforms enacted since the financial crisis, firms now pay a smaller share of bonuses in the current year, while a larger share is deferred to future years, the report notes. The DiNapoli bonus estimate includes cash bonuses for the current year, supplemented by compensation deferred from prior years.
“Wall Street navigated through some rough patches last year and had a profitable year in 2013. Securities industry employees took home significantly higher bonuses on average,” DiNapoli says in a statement. “Although profits were lower than the prior year, the industry still had a good year in 2013 despite costly legal settlements and higher interest rates. Wall Street continues to demonstrate resilience as it evolves in a changing regulatory environment.”
DiNapoli estimates the securities industry employed 165,200 workers in New York City in December 2013, which is 12.6 percent fewer workers than before the financial crisis. Employment in the securities industry in New York City has now “stabilized,” he says. He also reports that:
• Despite its relatively small size, the securities industry is still one of New York City’s major economic engines. The securities industry, for example, accounted for 22 percent of all private sector wages paid in New York City in 2012, even though it accounted for only five percent of the city’s private sector jobs;
• The securities industry also generates a significant amount of tax revenue for New York state and New York City. DiNapoli estimates New York City collected $3.8 billion in taxes in fiscal year 2013 from activities directly attributed to the securities industry, nearly 27 percent more than in the prior year and the second-highest level on record. Although less than the prerecession peak (11 percent), the securities industry accounted for 8.5 percent of the city’s tax revenues;
• New York state, which depends more heavily on Wall Street revenues than the city does, collected $10.3 billion in taxes attributed to the securities industry during the state’s fiscal year 2012-13. Last year, the securities industry accounted for 16 percent of all state tax revenue, less than the pre-recession peak (20 percent); and
• City tax revenues could be $100 million higher than anticipated in the city’s budget because it assumed a five percent decline in the bonus pool. The state budget assumes a 7.8 percent increase in bonuses for the entire financial sector. While there is the potential for some additional state tax revenue, the state outlook is more consistent with DiNapoli’s forecast.
Chilton Leaving CFTC, Plans Book
Bart Chilton, CFTC Commissioner
The tenure of Bart Chilton, who joined the U.S. CFTC as commissioner in 2007, is set to come to an end this week.
He announced his resignation last November 5, on what he called a “significant day,” just as the CFTC was considering “speculative position limits,” which he said he regarded as the “signal rule” of his CFTC tenure. “I am reminded of that great Etta James song,” he added, of both his departure and the proposed limits rule: “‘At Last.’”
Earlier this month, Chilton addressed the expansion of CFTC’s role under the Wall Street Reform and Consumer Protection Act (Dodd-Frank) and what he considered the commission’s under-funding in the proposed FY 2015 budget, saying, “The CFTC was given a large swath of the swaps market oversight and regulation — tens of trillions of dollars in formerly dark market trading. But we have not received a commensurate increase in funding to bring needed light to these markets, despite being assigned the authority to do so by Congress. We have the mandate, but not the money, to do the job.”
The hallmarks of Chilton’s tenure are widely regarded as his campaigns to limit commodities speculation and algorithmic, high-frequency trading, and in that same early-March statement he warned that inadequate funding meant that the CFTC “won’t be able to keep up with the high frequency cheetah traders who are scooping up microdollars in milliseconds and potentially roiling markets. Again, we will only be reactive.”
Chilton also served as chairman of EEMAC, the CFTC’s energy and environmental markets advisory committee. Prior to joining the CFTC, he was chief of staff and vice president for government relations at the National Farmers Union. From 2001 to 2005, he was a senior advisor to then-U.S. Senator Tom Daschle.
Sharon Y. Bowen, a former securities lawyer, has been nominated to succeed Chilton, whom the New York Times recently called the “the commission’s most liberal and outspoken member.”
Chilton is planning to write a book about the relationship between Wall Street and Washington, according to Bloomberg News. That book’s title will be “Theft.”
Capco Hires from Accenture
Financial services consultancy Capco has added Barry O’Connell from Accenture to the company’s banking practice partner team in North America.
O’Connell, who will be based in Capco’s New York City office, will work with the team on developing growth strategies for corporations, including go-to-market, market entry and new business creation. O’Connell’s 13-plus years of experience in banking and consumer, small business and commercial payments included a focus on digital and mobile innovation, Capco notes.
Prior to joining Capco, O’Connell served as head of Accenture’s financial services strategy practice in North America.
SmartStream Appointee from Moody’s Analytics
Marcus von Rahden, acting director, Frankfurt, Smartstream
Post-trade solutions vendor SmartStream Technologies has appointed Marcus von Rahden from Moody’s Analytics, a risk management subsidiary of the ratings agency Moody’s Corp., as regional director overseeing its back office processing solutions and data management services.
With more than 20 years of experience in financial services, von Rahden will be acting director, based in the Frankfurt office, and will be responsible for all operations in the region.
At Moody’s Analytics, von Rahden was responsible for regulatory compliance solutions to address Solvency II and Basel III, according to a SmartStream statement.
The new Frankfurt team will be working with the product development teams in Austria and the UK, as well as with the head office in London, and will be servicing the existing Corona and TLM client base in Germany, as well as new customers, officials say.
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