Despite the Wall Street meltdown, the nation's biggest banks are preparing to pay their workers as much as last year or more, including bonuses tied to personal and company performance.
So far this year, nine of the largest U.S. banks, including some that have cut thousands of jobs, have seen total costs for salaries, benefits and bonuses increase by an average of 3 percent from a year ago, even though each quarter of 2008 has been weaker than the last.
"Taxpayers have lost their life savings, and now they are being asked to bail out corporations," New York Attorney General Andrew Cuomo said. "It's adding insult to injury to continue to pay outsized bonuses and exorbitant compensation."
Banks will decide what to pay out in bonuses in the coming months; just because they've been accruing money for incentive pay doesn't mean they will pay it out in full.
But some banks are setting aside large amounts. At Citigroup, which has cut 23,000 jobs this year, pay expenses for the first nine months of 2008 came to $25.9-billion, 4 percent more than the same period last year.
Typically, about 60 percent of Wall Street pay goes to salary and benefits, while about 40 percent goes to end-of-the-year cash and stock bonuses that hinge on performance, both for the individual and the company, said Brad Hintz, a securities industry analyst at Sanford Bernstein and a former chief financial officer at Lehman Brothers.
"The fundamental goal of the compensation plan is to allow an employee to get wealthy," Hintz said.