In the spirit of their seasonal “remembering the neediest campaign,” this morning’s New York Times gave us this heartrending story about Wall Street’s new club that no one wants to join: the Zeros:
Drawn from a broad swath of back-office employees and middle-level traders, bankers and brokers, the Zeros, as they have come to be called, are facing a once-unthinkable prospect: an annual bonus of … nothing.
“It’s going to a cause a lot of panic on Wall Street,” said Richard Stein of Global Sage, an executive search firm. “Everybody is talking about it, but they’re actually concerned about it becoming public. I would not want to be head of compensation at a Wall Street firm right now.”
These are the people whose pay was virtually doubled last year to compensate for their zero-bonus status, which they were assigned to “placate” regulators who had argued that bonuses based on performance encouraged excessive risk.
At Goldman, for instance, the base salary for managing directors rose to $500,000 from $300,000, while at Morgan Stanley and Credit Suisse it jumped to $400,000 from $200,000.
Even though employees will receive roughly the same amount of money, the psychological blow of not getting a bonus is substantial, especially in a Wall Street culture that has long equated success and prestige with bonus size.
And lest you think it’s just the zeros who are suffering on Wall Street in this year that $90 billion has been set aside for bonuses, they’re not: “It’s a real headache,” said another senior banker, who asked not to be identified because the topic is so volatile at his company. There has been so much grousing that in some cases, he said, “we’ll throw $20,000 or $25,000 at each of the Zeros so they’re not discouraged.”
Nobody should be discouraged in this Season of Hope.