December 12, 2008

Boston, MA (AHN) - Like their Wall Street counterparts, employees in Massachusetts' financial industry will face a bleak yearend as their bonuses are expected to be cut in half, according to estimates of compensation consultants.The repercussion of this is not only a drop in employee morale and finances, but also lower tax revenues for the states. In New York, where the bulk of Wall Street companies belong to the financial sector, state comptroller Thomas DiNapoli forecast reduced bonuses will translate into $6.5 billion less tax revenues for the state and city.

Frank Glassner, chief executive of Compensation Design Group, said finance sector officials and employees stand to lose billions of dollars in yearend bonuses because of the economic crisis and the conditions of the rescue package for bailed out firms.New York consulting firm Johnson Associates said the cut in bonuses would vary by sectors. Asset managers in mutual fund companies may see a 25 percent cut in their bonuses, while those at hedge funds will likely have a 35 percent reduction. Investment bankers will likely see a 45 percent dip.Traditionally Wall Street bonuses account for 60 percent of a finance company's total compensation package. The $700 billion bailout fund condition just ended that era.