When it comes to bonuses, the waiting on Wall Street is about to pay off.
A rash of bonuses that were deferred in the wake of the financial crisis will begin to vest in the coming weeks, resulting in vastly larger paydays than if bankers and traders had been paid in cash, according to a report by Crain’s New York Business.
After a challenging 2009, Goldman Sachs cut average employee pay by 13 percent, but to dull the pain, granted staffers $3.6 billion worth of shares that couldn’t be sold until January 2015, according to a regulatory filing.
The stock is currently valued at $5.1 billion, thanks to a 40 percent-plus run-up in Goldman stock to Friday’s close at $188.41.
“You’re going to see a deluge of bankers cashing out their restricted stock grants in the weeks ahead,” said Mark Williams, a lecturer at Boston University and former Federal Reserve Bank examiner. “These grants are deeply in the money.”
Bank of America granted employees $1.5 billion worth of restricted shares at a price of $7.78 each in early 2012, when the stock traded at close to a post-crisis low. BofA’s stock closed Friday at $17.04.
That means staffers could collectively pocket $1.8 billion in gains when people can start selling the shares at the start of next year.
Likewise, Morgan Stanley granted employees about $1 billion worth of stock in early 2012 at the depressed price of $18.09 a share. Those shares, which fully vest in January, have since doubled, to $2 billion.
Deferred pay has become more common since the financial crisis, growing from 25 percent of compensation to about 75 percent for Wall Streeters in the money.