How the bonus period happens on Wall Street

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favorite stories in this weekly newspaper.

The author is the former global head of capital markets at Bank of America and is now a managing director at Seda Experts.

On a TV show Seinfeldthe Costanza family celebrate the last holiday of the year called Festivus, with strange traditions such as “Speaking of Complaints” and “Strengths”.

For investment bankers, the equivalent amount comes between mid-January and mid-February, when they are told their total compensation for the previous year.

When I started banking in the mid-90s, the “comp day” rivaled the high drama holiday. Doors slammed open, older men (mostly men) fought back tears, and impromptu champagne-filled parties spilled into nearby bars. The whole floor was filled with bad feelings.

Today comp day continues with all the local post visit festivities. The modern banker is summoned to the manager’s office by an e-mailed calendar invitation. The manager, armed with a spreadsheet and HR-vetted talking points, delivers the news and monotony of economics teacher Ben Stein by Ferris Bueller’s Day Off.

The script follows the correct pattern. First comes the compensation total, followed by how it compares as a percentage to last year. Then the manager breaks down the bonus (or “variable compensation” formally) into its components: the immediate cash portion and the amount paid in restricted stock. The stock award schedule is detailed – which shares are available in which years. The director also announces the base salary for the coming year.

The meeting ends with vague blessings – from a symbolic pat on the head about “recognizing your contribution” to a simple tip about “areas for development”.

The organization of this party at home can be linked to different factors, especially the changes in the management of the recent financial crisis that changed the bonus of the banks to the compensation of the slow decline. Higher basic wages and inclusion of “role-based permissions” Europe (around EU bonus cap) means that the bonus is usually not the time to make or break first. Strong public scrutiny of bank securities has also forced a different kind of prudence.

Additionally, the elements of suspense and surprise have been largely eliminated. As January rolls around, performance reviews suggest results, rumors of an annual comp pool change abound, and they leak beyond senior management’s efforts to contain them. Team leaders, meanwhile, manage expectations.

Indeed, bankers have been participating, planning and hacking before the computer day, filling out online self-assessments and boosting their productivity. With large groups of different departments dealing with deals, income generation is always very important, which makes it easier to find a loan for an unrelated job.

But they are strange things. Back then, a senior colleague famously put the leadership on a 10-page PowerPoint presentation, including a list of “his” only deals to show how the bank would rank. how bad she is without him. When the story spread, it evoked a mixture of laughter, disbelief and naive respect for mere gall. I doubt many today would have the chutzpah to pull off such a thing.

Even the responses are now clean. Modern banks know any obvious display – happiness or anger – can be used against them. Get a nice bonus? Make yourself less disappointed; you don’t want the honchos to rethink their giving next year. Are you struggling? Give a stoic nod and quietly ask for the next conversation. The explosions of the past are (mostly) fossils, as old as Gordon Gekko’s. Motorola phone brick. When I led groups, no direct report ever raised their voice or betrayed more anger, even if their “number” was small.

Banks know they have an advantage, they have access to more than 99 percent of the population. But their sense of privilege isn’t about an absolute number — it’s about a comparison. Nothing hurts more than hearing that a guy is coming home more. When their computer is not enough, the my brother The complaint becomes bitter and vague.

Sometimes, you hear about a banker somewhere who gets angry after getting a “doughnut” (industry slang for zero) or a low bonus. Volcanic eruptions only serve to highlight how far we have drifted from time immemorial storm and stress.

The change reflects broader changes in investment banking, where the fraud culture of decades past has given way to something more regulated and more attentive to vision and compliance. The annual bonus tradition has become another carefully managed, dynamic event shaped by performance, changing office procedures and institutional decorum.

So when you get your “number”, don’t slam the door on your way out – it’s against the workplace code of conduct, and your employer may have grounds to return your missing property. use it!