Some bankers will be wearing big smiles this holiday season - and here's why.
From the ashes of the financial crisis emerged a big change in how Wall Streeters got paid. Out went the legendarily massive year-end cash bonuses. In came IOUs.
"People were screaming bloody murder," recalled Alan Johnson of compensation consultancy Johnson Associates. "They were yelling, 'Pay me now!' "
Crain's reports that it's safe to say the tantrum has passed. The IOUs — grants of company stock that couldn't be touched for years — are now worth huge sums because bank share prices have soared in recent years. In the coming weeks, many of these deferred bonuses will vest and result in vastly larger paydays than if bankers or traders had been paid in cash.
Consider Goldman Sachs. After a challenging 2009, Goldman cut average employee pay by 13%, but to dull the pain, granted staffers $3.6bn worth of shares that couldn't be sold until this coming January, according to a regulatory filing. The stock is currently valued at $5.1bn because Goldman's share price has risen more than 40%, to a recent $190, and now makes for one hell of a stocking stuffer.
The story at Goldman is much the same elsewhere.
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