It’s as old as the system itself and a topic that has resurfaced with much criticism over the last couple of days.  It’s BONUS TIME.  On Thursday of this week, the venerable house of Goldman is expected to release compensation numbers for the year.  Although typically the announcement has always been accompanied by protests, the figure this year is expected to draw even more attention.  Why?  Given the recent economic downturn and turmoil, experts still expect Wall Street bonuses to be higher than last year.  Some have even expected that year end compensation will double and remain in the six figure digits on average.  Goldman Sachs for example is estimated to set aside a whopping $23 billion in year end compensation – placing individual average payouts circa $600,000.

Now granted, this figure does not guarantee every employee that works at the bulge bracket bank this amount.  However, it does raise some eyebrows when considering the institution borrowed taxpayer funds in order to buffer itself from one of the worst financial crises in history.  Even more patronizing are the rumors that have suggested a $1 billion charitable donation by the investment bank.  The idea is enough to draw attention from the bonus hoopla – if only temporarily.

Nonetheless, Wall Street bonuses are set to rise at a time when unemployment has risen to double digit figures and productivity has slowed to a crawl.  How can this be?

• Bonuses for 2009 are expected to be higher due to lower bonuses offered to top players in 2008.  Companies involved in the last year’s meltdown were unlikely to pay high bonuses due to the wrangling that went on at the end of the year.  Now with the structures back in place and institutions on the mend, management is set to offer payouts which are going to be higher than last year.  For the record, compensation in 2008 was approximately 10 percent less than in 2007.

• Bonus structures have been revamped to accommodate the individual rather than the department.  As a result, higher payouts are likely required in order for groups to retain top talent.  Should an individual see a rather unappreciative boss, they may be more inclined to switch – taking their business down the street or overseas.

• Growth has been extraordinarily rich for the surviving investment banks.  With some earnings being boosted by recent acquisitions (Bank of America/Merrill Lynch and JP Morgan Chase/Bear Stearns), firm revenues are expected to be supported well past 2007’s big numbers.  A record $345 billion was recorded by Wall Street firms.  The number is being compared to this year’s figures for total revenue – which are already expected to come in at the high end of $440 billion.

However, all this talk may be for nothing as most of the recently printed figures are all estimations and hearsay.  The biggest consideration of all may come in the form of an announcement by Kenneth Feinberg this week.  The Pay Czar is schedule to issue statements on compensation packages at seven financial firms that receive federal funding, including well known bulge bracket banks.  Should compensation cause Feinberg to step back a little, be sure that the current administration will have something to say about it.

Tags: goldman sachs, pay czar, wall street bonuses

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