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Asset management firms are expected to cut executive
compensation 5% to 10% as clients drop higher-fee products and
swap out of active equity funds for passive or fixed income.
Bonuses for investment bankers dealing with M&A or equity
offerings will shrink 10% to 20%, the report said.
"This will be a confusing year in compensation," said Alan
Johnson, president of the consultancy whose report is closely
watched in financial circles. High interest rates, economic
uncertainty, bank collapses and uneven performance across
sectors will create different compensation scenarios, he noted.
Within investment banking, debt capital markets bankers are
expected to get bonus increases of 5% to 10% with the rebound in
corporate debt sales, the report said. Fixed income traders'
compensation will rise 10% to 15%.
Compensation for private equity and hedge funds is expected to
be unchanged from 2022. Although venture capital deals and
initial public offerings have dried up, this has been partially
offset by a pickup in private credit and infrastructure
investments.
The banking turmoil sparked by the failures of Silicon Valley
Bank, Signature Bank and First Republic Bank has sharply divided
the outlook for compensation. Bankers in large commercial banks
are expected to get 10% to 20% more in bonuses, whereas
executives in mid-sized banks will see 10% to 20% less
compensation, the report said.
(Reporting by Tatiana Bautzer; Editing by Richard Chang)
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