Goldman Leads Wall Street Bonus War

Under pressure to keep talent, losing firms shell out big
By Jim O'Neill,  Newser User
Posted Nov 19, 2007 11:56 AM CST
People walk past the Merrill Lynch building on Thursday, Nov. 15, 2007 in New York. John Thain, CEO of NYSE Euronext, was chosen on Wednesday to lead Merrill Lynch effective Dec. 1. (AP Photo/Brian McDermott)   (Associated Press)
camera-icon View 4 more images

(Newser) – The Big Five Wall Street securities firms will pay $38 billion in bonuses this year—up from $36 billion last year—while shareholders tote up $74 billion in losses, their worst year since 2002, Bloomberg reports. All but Goldman Sachs lost more than 20% of their market value, says an analyst, but "they're all going to have to fall into line. If Bear and Merrill plead poverty, they're going to lose all of their good people.''

The bigger bonus pool stems from record earnings in acquisitions, IPOs, and sales of junk bonds, according to an analysis of bonuses at Goldman Sachs, Lehman Bros., Merrill Lynch, Morgan Stanley, and Bear Stearns. Record earnings at Goldman are setting the pace: "They're playing a good hand as aggressively as you can play it,'' said John Gutfreund, former Salomon Brothers CEO, putting competitors in "an awkward position.''