Wall Street bonuses declined in 2010 to $20.8 billion, an 8% drop from the previous year even as the securities industry posted its second most profitable year in history, New York State Comptroller Thomas DiNapoli said Wednesday.
Wall Street cash bonuses have fallen sharply from the $34.3 billion peak in 2006. About 20% of the state's tax revenue comes from the securities industry.
DiNapoli said in an interview on CNBC that lower bonuses despite profits are due to changes in compensation models that are more stable than in the past.
"At first blush it may look like a negative, but really when you look at the total picture it's not, it shows Wall Street is still in strong shape," DiNapoli said. "The reduction of the cash-bonus pool is reflective of the fact that in response to the restructuring of the industry and financial regulation, compensation is being handled in a different way, more in terms of deferred compensation, deferred payment, stock options."
When compensation other than cash is included, total compensation packages are up about 6%, he said.
"We want long-term sustainable profitability — the kind of peaks and valleys that we've been going through has put tremendous pressure on our budget planning," DiNapoli said.
Wall Street's most profitable year on record was 2009 when federal bailouts and low interest rates fueled profits of $61.4 billion, according to the comptroller's office. Profits in 2010 were less than half, totalling $27.6 billion.
