Reports that Morgan Stanley would defer bonuses over a three-year period for most employees with salaries of more than $350,000 and whose bonuses are at least $50,000 recently set off alarm bells among financial sector workers.
While most owners of small to midsize businesses in Fairfield County aren’t concerning themselves with deferments for high-grossing employees, more companies are considering or have already paid out bonuses this year than over the previous several years, said Gil Watkins of Citrin Cooperman’s Norwalk office.
“I’ve found that generally bonuses are up this year compared to the last couple years,” said Watkins, a partner of the accounting and consulting firm, which has offices across the East Coast and in the Cayman Islands. “Even if the numbers weren’t quite what some of the companies may have expected, they did try to be cognizant of giving some sort of incentive to their employees going into 2013.”
Watkins estimated that roughly two-thirds of his clients, who consist primarily of businesses with 150 or fewer employees, gave bonuses “of some sort or the other” this year after holding down bonus and salary levels for the past several years.
“You don’t want them (employees) to jump because all of a sudden the economy gets better and they get a better offer,” Watkins said. “And that’s what companies are trying to avoid at this point, so they can retain people who are core to their businesses.”
He estimated that a smaller percentage of his clients are considering or have given employees salary raises.
“I think people feel that the economy for 2013 should be better but they’re not 100 percent convinced — nothing is a sure thing anymore,” Watkins said. Extending employees bonuses rather than raises gives employers more flexibility in budgeting, he added.
A recent survey by the Connecticut Business & Industry Association (CBIA) of its members showed that firms opting to give employees salary increases were projecting those increases would be in the 2.5 to 3 percent range.
Robert Dicks, principal of Deloitte Consulting L.L.P., said there has been “a little uptick across the board” in bonuses this year for employees of financial services firms.
The biggest change from past years, he said, is that firms are doing a better job of telling employees about bonuses.
Dicks called 2011 “the most misaligned bonus season we saw,” with employees of many financial firms receiving vastly lower bonuses than they had expected.
“By this year, most of the banks we see had communicated out at least a range of expectations so the employees were less surprised walking into the one-on-one meetings,” Dicks said.
After the 2008 financial crisis, banks and financial institutions would first determine bonuses for revenue producers, Dicks said. “The banks really scrambled to find enough money to cover people who were in client support roles and then especially some of the people who were in non-client facing roles,” such as human resources.
This year, he said, “the banks are adjusting to the new normal.”
“What we saw last year we think was a bottoming in a lot of the bonus calculations, especially in the non-revenue producing side,” Dicks said.