The bonus that is Christmas

With Christmas just days away, it's not just the goose getting fat.

Stockbroking houses and other finance firms are calculating end-of-year bonuses for their staff.

Last week, it was reported Wall Street's fourth largest securities firm Lehman Bros distributed more than $58 million in bonuses to seven top executives, including $21.2 million to chief executive Richard Fuld.

In New Zealand, the icing on the cake for top financiers and brokers is far thinner. But finding out exactly how sweet it was is no easy task.

Goldman Sachs JB WERE chief executive Lance Jenkins said data on bonuses paid by Wall St firms was available because most were listed.

"And you can make an intelligent guess at what incentives look like from year to year," he said.

"In this market you'd struggle to get that and, certainly, we wouldn't disclose that information."

But, said a senior executive at another large brokerage, who did not wish to be named, the best private client advisers in a very good year could earn $500,000.

An institutional broker would earn "perhaps another couple of hundred thousand" on top of that at the high end, while among investment bankers things were more "hit and miss".

"But you'd be into $1 million-plus territory for the best in a good year," he said.

"Where it initiates a transaction and leads to a spectacularly lucrative outcome for a client, the bonuses can be quite substantial and akin to those paid on Wall St."

Such bonuses would not be rare but would reflect the success of a deal.

"Typically, there is a high sharing of rewards in that space."

Moving down market a little, a senior executive of a mid-sized brokerage house said firms tended to have a pretty standard pay structure.

"Most advisers are on a set commission percentage. If they do more than their yearly budget, then they can actually go on to a higher percentage and they get that as a bonus."

Percentages of commission that advisers received ranged from 30 per cent to more than 40 per cent of what they earned for the firm.

"The average is probably around 35 per cent. I think that's reasonably standard across the industry. But brokerages don't really talk about things like that."

While the amount advisers earned for their firms varied, "the very top ones I would say would be producing in total up towards the $1 million mark if they were very experienced".

ABN AMRO Craigs chief executive Frank Aldridge said his company was a bit different to other firms in that it did not pay a one-off annual bonus.

The firm's investment advisers either worked on a commission or profit-share basis, which was a base salary plus a quarterly bonus. Other staff, including investment bankers and researchers, were paid a salary plus quarterly bonus.

About 80 of the firm's 200 staff were shareholders and also got a quarterly dividend.

Aldridge said there was a large array of commission structures at the firm but generally commission was "more at the upper end than the lower end" of the standard industry range. The firm had "a few people" that wrote more than $1 million worth of business each year.

Meanwhile, despite signs the sharemarket's spectacular bull run appeared to have fizzled out earlier this year, advisers may still get good bonuses.

Forsyth Barr managing director Neil Paviour-Smith said there was no direct correlation between the strength of the market and the size of bonuses.

"Bonuses will reflect the profitability of the firm and that's a function of the overall level of activity, number of deals, and so forth."

In the stocking

* Top private client advisers: About $500,000
* Top institutional advisers: About $700,000
* Top investment bankers: $1 million-plus
(Overall salary, including bonuses)