Bankers thought to lose $1bn due to stock bonus drop

Graph And Coins

For bankers, getting a bonus in stock has become an albatross.

MarketWatch reports that employees at Goldman Sachs have been hit with more than $400 million in paper losses thanks to a plunge in the value of stock bonuses paid out early last year, according to a Wall Street Journal analysis.

Similar declines have been felt by advisers, traders and other staff across Wall Street.

J.P. Morgan Chase, Bank of America, Citigroup and Morgan Stanley haven’t yet reported how much stock they granted a year ago as part of employees’ bonuses, but the declines in banks’ share prices -- based on their averages from January 2015 - have been equally severe, ranging from a 32% drop at Morgan Stanley to a 17% decline at Goldman. (J.P. Morgan, an exception, is up 2%.)

The decrease is providing the first pocketbook test of the new bonus practices banks established in the wake of the 2008 financial crisis. “It’s a big deal,” said Alan Johnson, managing director of pay consultant Johnson Associates. “The business is down, the market is down, the stock is down. It couldn’t come at a worse time.”

An expanded version of this story is available at WSJ.com

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