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Opinion
Barry Ritholtz

Wall Street Bonuses Aren’t Really Bonuses

Deferred profit-sharing is the better way to think of the annual payouts.

That was a bit of a letdown.

That was a bit of a letdown.

Photographer: Andrew Burton/Getty Images North America

Each year about this time, Wall Street celebrates a kind of madness that has nothing to do with college basketball. It is bonus season, and the enthusiasm is understandable, given the widespread participation in the estimated bonus pool of $27.5 billion for workers in New York’s financial industry.

Despite that heft, the 2018 numbers that just came out might be a little disappointing to some. The average bonus fell 17 percent to $153,700 a person, the first decline in three years. Given that the stock market last year endured the steepest slump since the financial crisis, that decline should come as no surprise. The bonus pool is also spread over a larger base of workers. What does surprise many people is how steady the bonuses have been during most of the past decade as the chart below shows. Pressure on fees and underperformance by alternative investments seemed to play little role in year-end payouts.